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The New Zealand Dollar (NZD) strengthened on Monday following the release of key economic data from China. The NZD/USD pair extended its gains for the second straight session, trading around 0.5760 during Asian market hours. The positive momentum came as China’s Retail Sales increased by 4.0% year-over-year in January and February, surpassing December’s 3.7% rise.
In addition to retail sales, China’s industrial production showed a 5.9% annual increase, exceeding the 5.3% market forecast but slightly below the previous 6.2% reading. As China is a major trading partner for New Zealand, strong economic performance in China tends to support the NZD.
The National Bureau of Statistics (NBS) addressed China’s economic outlook during a press conference on Monday. While emphasizing the economy’s resilience, the NBS pointed out growing external pressures and an increasingly complex global landscape.
Further bolstering the NZD, China introduced a special action plan over the weekend aimed at stimulating consumption. This initiative includes wage hikes, measures to encourage household spending, and steps to stabilize stock and real estate markets. These developments contributed to improved investor confidence in the region.
Domestically, New Zealand’s Business NZ Performance of Services Index (PSI) declined to 49.1 in February from 50.4 in January, indicating contraction in the services sector. However, the NZD/USD pair continued its ascent as the US Dollar (USD) weakened ahead of key US Retail Sales data set for release in the North American session.
The USD faced downward pressure following Friday’s report from the University of Michigan (UoM), which revealed a decline in its preliminary Consumer Sentiment Index for March. The index dropped to 57.9, the lowest since November 2022, from 64.7 in February. This reading also fell short of market expectations of 63.1, adding to concerns about consumer confidence in the United States.
Economic Indicator: Retail Sales (YoY)
Retail Sales data, released monthly by China’s National Bureau of Statistics, tracks the value of goods sold by retailers across the country. This indicator is closely monitored as a measure of consumer spending trends. Year-over-year (YoY) changes compare sales figures for a given month with those from the same month a year earlier. A high reading typically strengthens the Chinese Yuan (CNY), while a lower reading may weaken it. Given China’s economic ties with New Zealand, strong Retail Sales data often provides a boost to the NZD as well.
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