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Turkey Day might be around the corner, but that doesn’t mean you can’t get a few pips from a top-tier report before you close up shop! Here’s how you can trade New Zealand’s retail sales release.

Tomorrow at 9:45 pm GMT New Zealand will print its retail sales report for the September quarter.

What happened last time?

  • Retail sales: 2.0% vs. 0.7% expected, 1.6% previous
  • Core retail sales: 2.1% vs. 0.8% expected, 1.5% previous

Statistics New Zealand printed a 2.0% increase in retail sales volume in Q2 2017, which is higher than the previous quarter’s upwardly revised 1.6% uptick and marks the highest reading since Q2 2016.

Meanwhile, core retail sales came in at 2.1%, which is also higher than the expected 0.8% gain and 1.5% increase in the previous quarter.

Apparently, huge sporting events such as the World Masters Games and the Lions rugby tour helped boost the numbers.

Food and beverage, which includes cafes, restaurants, bars, takeaways, and catering services, saw a record volume increase of 4.2%, while accommodation sales also shot up by 6.1%, the strongest in three years.

Other numbers didn’t look bad either. 12 out of 15 industries posted higher sales volumes while 11 out of 15 reported higher sales values.

NZD's 1-Hour Forex Charts
NZD’s 1-Hour Forex Charts

Kiwi mostly shrugged off the upbeat numbers, though, probably because the RBNZ had just shared its neutral stance a few days before the report was released.

What are market players expecting this time?

  • Retail sales: 0.4% expected, 2.0% previous
  • Core retail sales: 0.9% expected, 2.1% previous

Seems like traders are estimating lower retail activity in Q3. But just how legit are market players’ expectations? Let’s take a look at other indicators for clues.

First is the unemployment rate coming in at 4.6% in Q3 2017, which marks the third consecutive decline AND the lowest jobless rate since Q4 2008.

Take note that the labor force participation rate increased during the period, which means that the decrease in unemployment rate came from workers finding jobs instead of workers giving up from their job-hunting.

Annual wages also looked promising at 1.9%, the largest increase since 2012. Details reveal that private wages increased by an annual rate of 1.9%, while public sector wages also popped up by 1.5% from a year earlier in Q3.

The consumer confidence report is telling a different story, however. The confidence index dropped to a seven-month low of 123.7 in October and future conditions slipped 4.6 points to 123.2 even as current conditions edged 6 points higher to 124.6. Apparently, some New Zealanders are turning a cautious eye on their new government and their policies.

Based on historical data, we can see that analysts tend to undershoot their estimates of the headline reading. And while we don’t have as many samples for the core reading, the last five Q3 releases have resulted in poorer-than-expected readings.

If you’re trading the report tomorrow, keep in mind that the Fed’s meeting minutes will be printed just an hour or two before New Zealand’s retail sales numbers.

And then there’s the Turkey Day holiday in the U.S., which could affect price action of the dollar and its major counterparts if U.S.-based traders take profits from their positions en masse.

This means that, unless we see significant upside or downside surprises, it’s likely that traders will mostly price in other market catalysts moving the major currencies this week.