In July 2025, New Zealand saw a small rise in electronic card retail sales, up 0.2% from the month before. This follows a 0.5% increase in June. This data reflects about 68% of New Zealand’s core retail sales, making it a key indicator of monthly retail activity. Compared to the same time last year, retail sales increased by 1.7%, bouncing back from a drop of 0.4%. Despite this data being released, the NZD/USD exchange rate stayed mostly the same, around 0.5955.

Mixed Economic Signals

The latest retail sales figures give a mixed picture of New Zealand’s economy. Spending growth slowed down in July compared to June, but the yearly growth shows a solid recovery. The market reacted flatly, with the NZD/USD remaining stable at 0.5955, indicating the report hasn’t changed the immediate outlook. This decrease in monthly spending may actually please the Reserve Bank of New Zealand (RBNZ). The RBNZ has kept interest rates steady to fight ongoing inflation, which was reported at 3.8% in Q2 2025, above their target. The soft retail numbers ease pressure on the central bank regarding further interest rate hikes, keeping the door open for potential cuts later in the year. However, the significant yearly growth from -0.4% to +1.7% shows that New Zealand consumers are resilient. This strength may prevent the RBNZ from adopting a very dovish stance soon, creating a support level for the Kiwi dollar. We saw a similar stabilization phase in 2019 before global changes impacted the economy. With this conflicting data and a cautious central bank, we expect the NZD/USD to stay within a range in the coming weeks. Volatility for NZD options is currently low compared to the peaks seen during the 2022-2023 interest rate hikes. This situation makes low-volatility strategies, like selling strangles, appealing for traders who believe the currency will stay within a set range.

Conclusion for Traders

Traders need to be careful, as this stability might change with the next important data release, like quarterly inflation or employment statistics. Historically, low volatility can suddenly shift, so managing short-volatility positions is crucial. The main risk is unexpected data that could push the RBNZ to change its current neutral approach. Create your live VT Markets account and start trading now.

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