Summary:

• NZD has been the worst performing in G10 so far
• AUD got upbeat soft data from NAB
• Williams confirms a recent strong NFP report

The New Zealand dollar is the worst performing currency following feeble data on retail credit card spending. A monthly basis showed 0% m/m and 0.8%m/m when it comes to core retail sales in June Both indices missed market estimations causing a decline in the NZD.

Moving on, we got June’s soft indicators from NAB regarding business conditions as well as business confidence. Both turned out to be better than previous ones. The former came in at 15 (prior one was 12) and the latter showed a rise from 7 to 9. Business confidence in Australia has already come back to pre-crisis levels and well above the long-run average. In turn, confidence across businesses has lagged conditions reported by companies for a long time, that trend continued in June as well.

Moreover, the Australian Bureau of Statistics revealed its latest housing data for May which showed a further slowdown in home loans. The release showed an increase 1% m/m while a market’s consensus had expected 1.5% m/m. Besides, investment lending declined 1.4% m/m compared with a recent drop 2.5% m/m. These number show that macro-prudential measures which were implemented by the RBA have already kicked in. Let us recall that the Reserve Bank of Australia is still concerned about elevated levels of mortgage debts as a threat to both financial stability at household spending and thus the level of economic activity.

The NAB’s confidence and conditions measures head towards their all-time highs. Source: Bloomberg

Furthermore, we got the speech from FED’s Williams which was in a way similar to the recent one at least as far as the state of the US economy is concerned. He referred to the recent jobs report describing it as a strong one. Head of the San Francisco Federal Reserve added that if inflation did not pick up, it would argue for slower policy tightening.

The NZDUSD is creeping lower following worse than estimated credit card retail sales. It could go lower if sellers are sufficiently determined to break a support area. Source: xStation5

The NZDUSD is declining towards a critical support zone being the lowest since almost mid-June. The pair rejected a downward trend line and rebounded from it several times. If sellers are able to break the above-mentioned support zone, it could foretell deeper declines toward 0.7145 or lower.