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    New Zealand retail sales increased by 0.7% month-on-month, while NZD/USD saw slight movement.

    by VT Markets
    /
    Sep 12, 2025
    In August, New Zealand’s retail card sales increased by 0.7% compared to the previous month, up from an earlier rise of 0.2%. Year-over-year, sales grew by 0.9%, which is lower than the prior rate of 1.7%.

    Currency Movement

    The NZD/USD currency pair showed little change, remaining slightly lower despite a previous strong rise. This earlier increase was driven by US CPI data that influenced expectations about a possible rate cut by the Federal Open Market Committee in September. The small monthly rise in retail sales is not expected to change the Reserve Bank of New Zealand’s plans, especially since annual growth is slowing. We believe this mixed data suggests the Reserve Bank will keep its Official Cash Rate steady at 5.50%. The domestic economy doesn’t seem strong enough for any aggressive moves. It’s important to note that the recent rise in NZD/USD was mainly due to weak US inflation figures, which increased speculation about a Federal Reserve rate cut. Market focus is now on the FOMC meeting later this month, rather than New Zealand’s data. Current futures markets indicate an over 80% chance of a 25 basis point cut from the Fed, making this the biggest factor affecting the currency pair.

    Trading Strategy

    Given the current situation, it’s better to trade on volatility instead of taking a strong position on the NZD itself. Using options like straddles or strangles that expire after the Fed’s announcement could be a smart approach for a big price shift. Implied volatility for these contracts is expected to rise as the event approaches. Looking at past cycles, such as before the Fed’s shift in 2019, the market often gets ahead of itself in predicting easing. The main risk for anyone betting on NZD strength is a surprising hawkish stance from the Federal Reserve. If they indicate a delay or push back against market expectations, the US dollar could jump sharply. Create your live VT Markets account and start trading now.

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