The eurodollar remained range-bound against the Kiwi dollar yesterday as data from both Germany and New Zealand were better than economists’ expectations. While Germany’s business confidence improved slightly in February, the total retail sales volume grew in New Zealand during the fourth-quarter. The EUR/NZD pair remained range-bound between 1.7087 and 1.7163 in the past 24 hours.
Despite worries about coronavirus outbreak, according to data published by Ifo institute, Germany’s business confidence increased to 96.1 in February, from an upwardly revised 96 in January. Economists anticipated the figure to decline to 95.30 from January’s earlier estimate of 95.9.
The current conditions index was 98.9 for February, compared with 99.20 a month before. The reported figure was higher than economists’ forecast of 98.60. In the meantime, the expectations index increased to 93.4, from 92.90. Economists had anticipated a reading of 92.1.
In the manufacturing sector, business confidence improved for the third successive month. It was mainly due to significantly low pessimistic anticipations. The business climate deteriorated in the trade sector as the latest improvements in the prevailing situation and expectations incurred a blow. Likewise, the business climate index declined in the construction sector. It was an outcome of pessimistic projections by enterprises. Conversely, their evaluation of the current situation improved a little.
Commenting on the Ifo sentiment data, UniCredit bank Economist Andreas Rees stated that the reported figures “at first sight… seems to be a pleasant surprise” but cautioned that the February data comprises of the latest developments.
Earlier yesterday, Statistics New Zealand reported that the total volume of retail sales grew by a seasonally adjusted 0.7% q-o-q in 4Q 2019. Economists had anticipated the total volume of retail sales to increase by 0.8% for the reported period.
In the earlier three months, the total volume of retail sales increased by 1.7%. Correspondingly, the total value of retail sales grew by 1.1% q-o-q (N$268 million) in the fourth quarter of last year. Nine of the 15 industrial sectors recorded higher sales volumes.
Electrical and electronic goods posted the most significant gain, with 4.3% growth, after growing at 4.4% in the earlier quarter. Pharmaceutical and other kinds of retailers recorded an increase of 4.1% in the fourth quarter, following a 2.8% growth in the previous quarter.
Department stores recorded the most substantial decline 0f 3.8% in the recent quarter, following a 3.8% increase in the previous quarter. The total value of stock held at the end of December 31st, 2019, was N$8.40 billion, an increase of 2.6% (N$216 million) from December 2018. 11 of the 15 retail sectors posted stock increases in the last month of 2019, compared with the previous year.
The positive economic data from both countries is anticipated to keep the currency pair range-bound in the short-term.
Technically, the currency pair faces resistance at 1.7160. The next support is anticipated only near 1.6815. Additionally, the stochastic oscillator has started declining. Therefore, we are expecting the currency pair to turn weak in the near-term.
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