The Kiwi dollar traded in a narrow range against the loonie yesterday following the release of weak economic data from both New Zealand and Canada. While New Zealand’s trade deficit for October was wider than expected, Canada’s retail sales fell in September. Overall, the NZD/CAD pair traded in a narrow range of 0.8190 and 0.8245 in the past 24 hours.
According to Statistics New Zealand, the country’s trade deficit widened to N$2.13 billion in October, from N$1.696 billion in September, and disappointed economists who were expecting a trade deficit of N$1.72 billion.
On a y-o-y basis, goods exports rose by 14% (or N$758 million) to N$6.10 billion in October 2022. The increase was led by a 34% (or N$503 million) boost in the export of milk powder, butter, and cheese to N$2 billion.
Likewise, goods imports surged 24% (N$1.60 billion) to N$8.30 billion in October 2022. The increase was led by a 37% (or N$323 million) growth in imports of vehicles, parts, and accessories to N$1.20 billion. Also, imports of petroleum and products increased by 44% (or N$289 million) to N$943 million.
Furthermore, goods exports jumped 14% (or N$ 9 billion) to N$71.10 billion in the year ended October 2022. Similarly, goods imports grew by 25% (or N$17 billion) to N$84 billion in the same period. The annual trade deficit widened to N$12.90 billion in the year ended October 2022, from N$4.90 billion in the year ended October 2021.
According to Statistics Canada, retail sales fell by 0.50% m-o-m in September to C$61.10 billion, following an increase of 0.70% in August, and in line with economists’ estimates. Sales decreased in seven out of 11 subsectors, mirroring 74.90% of retail trade.
Gasoline stations posted a drop of 2.40% in September, reflecting the third successive drop in a row. Likewise, food and beverage stores recorded a decrease of 1.30%.
Sales at used card dealers declined 3.50% but were partly negated by a 2.30% and 0.40% rise in sales at other motor vehicle dealers and automotive parts, accessories, and tire stores, respectively.
Furthermore, retail sales dropped 1% in 3Q 2022. This was the initial quarterly decrease since sales decreased by 11.90% in 2Q 2020. In volume terms, retail sales fell by 1.40% in 3Q 2022.
Excluding gasoline stations and motor vehicle and parts dealers, core retail sales fell by 0.40% m-o-m in September. In volume terms, retail sales decreased by 0.10% in the same period. Food and beverage stores recorded a drop of 1.30%m-o-m in September. On the contrary, the biggest boost to core retail sales was contributed by a 1.70% increase in clothing and clothing accessories stores.
The statistical organization also stated that retail e-commerce sales declined by 5.40% m-o-m in September. On a y-o-y basis, retail e-commerce sales inched down 0.10% in September 2022, to C$3.40 billion, representing 5.30% of aggregate retail trade.
Furthermore, according to an advance estimate provided by Statistics Canada, the country’s retail sales rose by 1.50% in October.
In a separate news release, Statistics Canada stated that New Housing Price Index declined by 0.20% m-o-m in October, following a decrease of 0.10% in September, and disappointed economists who were forecasting a 0.20% rise.
On a y-o-y basis, new home prices rose by 5.10% in October 2022, reflecting the seventh month of decline in a row.
The weak economic data from both countries are expected to keep the NZD/CAD pair range bound in the short term.
Technically, the NZD/CAD pair is gaining momentum after testing the support at 0.8190. The next resistance is anticipated only near 0.8340. Additionally, the stochastic indicator is in the bullish zone. Therefore, we anticipate the currency pair to remain in an uptrend in the days ahead.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
