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Overall risk aversion dragged NZD lower across the board last week. Can this week’s catalysts encourage retracement?

Quarterly retail sales

  • Retail trading only inched 0.7% higher in Q4 after a 1.7% lift in Q3 2019
  • Core retail sales also underwhelmed with a 0.5% increase when markets saw a 0.9% growth

Trade balance (Feb 26, 9:45 pm GMT)

  • New Zealand posted a 547M NZD trade surplus in December, better than the 100M surplus that markets had expected
  • Exports grew by 4.8% while imports fell by 5.4%
  • The WHO also pronounced Coronavirus as “global health emergency” at the time, which extended NZD’s downtrend across the board
  • Analysts expect to see a return to trade deficit in January

ANZ business confidence (Feb 27, 12:00 am GMT)

  • Improvements in the manufacturing sector helped lift business confidence 13 points higher in December
  • 13% of respondents expect business conditions to deteriorate, the highest read since October 17
  • NZD popped up during the Asian session but lost its ground during the London open
  • Market players expect more positive confidence and conditions readings in January
  • Traders look at business surveys like this because the Reserve Bank of New Zealand (RBNZ) factors them in its policy decisions

Market risk sentiment

  • Coronavirus concerns will continue to factor in NZD’s intraweek trends
  • Watch out for potential catalysts that could inspire retracements or intraweek reversals
  • China will also print its first PMIs since the Coronavirus outbreak, which could influence overall risk sentiment

Technical snapshot

  • RSI flags NZD as “oversold” against CAD and USD on the daily time frame

  • AUD/NZD is trading below its 200 SMA but above its 50 SMA
  • NZD/JPY is almost above its 200 SMA but is trading below its 50 SMA
  • Watch out for potential retracements or reversals on the pairs above