WELLINGTON - New Zealand's retail sector faces a challenging period as projections indicate a 0.8% decline in third-quarter sales, marking the third consecutive quarter of downturns. This anticipated slide comes on the heels of a 1% decrease in the second quarter, with high inflation and increased borrowing costs taking a toll on consumer spending habits. Despite these headwinds, the Reserve Bank of New Zealand (RBNZ) has held interest rates steady at 5.5% for three successive meetings.
Inflation in New Zealand has seen a modest improvement, easing from an annual rate of 6% to 5.6%. Concurrently, the New Zealand dollar (NZD) showed some resilience against the US dollar (USD), trading at approximately $0.6042, although it confronts resistance at $0.6076 and finds support at $0.5996 and $0.5885.
Looking ahead to Friday's market activities, despite subdued USD activity due to the US market closure for Thanksgiving Day, upcoming US manufacturing and services Purchasing Managers' Index (PMI) releases could inject volatility into currency markets. These data points have the potential to influence NZD/USD prices further, especially if they deviate from forecasts of 49.8 for manufacturing and 50.4 for services PMIs.
The NZD/USD currency pair is testing resistance near $0.6076, with additional resistance noted at $0.6161. Support levels are observed around $0.5996, with further backing expected if prices fall back to $0.5885. The steady interest rates amidst easing inflation suggest that the RBNZ might be signaling an end to its tightening cycle, which could have implications for future economic policy and consumer confidence.
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