Next week gets off at an early start with important Kiwi data coming out on Sunday night at 22:45 CET, or 16:45 EST. The data could inject some volatility into NZD pairs.
Electronic Card Transactions data isn’t usually considered a major data release. But, it has recently caused some important market moves. Here are some things to help understand how the market might behave around this data.
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The Data
Electronic Card Transactions is something of a unique bit of data for New Zealand, so if you are unfamiliar with it, check out the previous article that explains the relevance for the markets. Basically, it covers around 60% of consumer transactions in the country and is the primary measure of consumer sentiment.
The consensus of expectations is that electronic transactions dropped by 0.1% from the prior month, but still managed to raise 5.3% annually. This particular series tends to have quite a bit of volatility, jumping above and below positive and negative. The market tends to focus mostly on the month over month data.
What’s Going On
The latent concern among traders is that the troubling economic situation in Australia will migrate across the Tasman Sea to affect New Zealand. So far, that doesn’t seem to have happened. However, the expectations for a drop in rates from the RBNZ have increased.
One of the first places that we might see that contagion would be in consumer sentiment. This is because people start to hold back purchases over concerns of future prospects.
The prior months’ results got special attention when December came in with the worst performance since the subprime crisis. Nevertheless, concerns were alleviated when there was a relatively good result during January, bringing the data series back in line with expectations.
Last month was a break in the negative trend registered in the prior months. But we’d need to have another positive result this month to cement the perception that we’re getting out of the woods. And, last month’s result wasn’t an exception to the trend.
Analysts aren’t all that confident that’s the case. They are currently projecting a negative result, though just barely. -0.1% is still within the normal swings in this data series. However, it is a little concerning that it’s happening in the middle of the summer. Especially considering there has been a record number of tourist arrivals, presumably spending with their credit cards.
Those record tourist arrivals might be helping to cover underlying negative data for the domestic market. But we won’t know for sure until the summer tourist season is over in a couple of months.
On the other hand, it might simply be taking in stride the global economic situation, and have enough elasticity between supply and demand that consumer spending and the economy will continue to be positive.
The Market
With consumer confidence data printed only once every three months, this data largely replaces it for monthly measurements. The last quarter showed a divergence between reported consumer confidence and consumer spending, and we still have to wait another month and a half to see if that situation is resolved.
While we don’t normally expect strong moves in the market after electronic card transaction data, it can be a trendsetter, This is particularly true with the dearth of other New Zealand data around this point. The next bit of important data for the Kiwi isn’t until Wednesday on the Asian session.
