The economic calendar for next week gets an early start with key data from New Zealand during the Sunday Asian session.
This data release gets extra attention because it’s a data set that we would typically expect to receive monthly. However, in New Zealand, we only get to see it quarterly.
Here’s a look at what’s been going on and what we might expect from the markets even before the weekend is over.
Schedule and Expectations
There are three versions of quarterly retail sales all coming out at the same time: Sunday 22:45 CET (or 16:45 EST). The data is relevant to the next publication out of New Zealand expected on Tuesday evening.
The start of the event is the quarterly change in retail sales. This is expected to accelerate to 1.3% growth, compared to the 0.0% reported previously. This is the figure the market usually focuses on.
Additionally, we have Core Retail sales, which exclude automotive-related purchases. This data is expected to increase by 2.1% compared to 0.4% prior.
Finally, we have the year over year comparison in retail sales. This is expected to have increased by 9.7% compared to 2.7% in the third quarter.
The Latest Trends
The retail sales figure tends to represent consumer spending, in terms of practicality. The quarterly change typically fluctuates between 0.0% and 2.30% with quite radical changes between each report.
However, the third quarter came in with the worst performance since the financial crisis. It was one of the first bits of data published ahead of the change in the outlook for the NZ economy.
In hindsight, the fourth quarter was quite lackluster for the Kiwi economy. This can give us a look into what we might expect from the upcoming data.
Electronic Card Transactions for that quarter, for example, significantly underperformed, marking a multi-year low. If people aren’t buying, it’s hard for retail sales to do well.
Where does the optimism for the upcoming data come from? Well, earlier this week we had a significant beat on the quarterly PPI Output, indicating prices were going up and that might be a sign of demand.
Even so, several analysts are warning to be somewhat cautious about the rosy outlook that the expectations have of returning retail sales to the mid-range of their normal fluctuations.
The Market Moves
As a stand-in for consumer sales, if this data significantly outperforms, we could see some upswing to the NZDUSD.
The kiwi has been one of the better performing commodity currencies of late. And if it’s managing to escape the issues plaguing the CAD and AUD, that might make it especially attractive.
On the other hand, that better performance leaves it more susceptible to move lower on worse than expected data. And we shouldn’t forget the weekend factor. With most major traders typically away from their desks, we could see a more erratic response in the currency to the data.