Kiwi Dollar Gains on Retail Sales

The NZDUSD gained 60 pips immediately after the release of the retail sales data for the third quarter. Retail sales rose 2.2% in Q3, more than three times the analyst expectations of a 0.6%. The rise was attributed to overseas visitors attending the Rugby World Cup.  More than 80,000 overseas visitors attended the Rugby World Cup. All the 15 sectors saw a rise in sales, with accommodation industry rising 6.5% and grocery stores seeing an increase of 3.8% in sales. The value of retail sales rose to NZD4.4 billion in the third quarter, a 4.1% rise from the previous quarter. The South Island saw a 3.6% jump in sales and the North Island saw a 2.2% rise in sales. Both volumes and value of retail sales are on the up trend.
 
Japan’s third quarter GDP grew by 1.5% according the latest report from the Cabinet office, in line with analyst expectations. The second quarter saw a 0.5% contraction in GDP. On an annualized basis GDP rose by 6%. Japan’s performance showed resilience after the economy suffered a recession following the March 11 earthquake. Factories and supply chains have been fixed quickly and exports are on track to reach pre-earthquake levels. Japan is expected to continue recovery as long as the European financial crisis can be contained. Japan’s exporters also face an uphill struggle against the Yen which has reached record highs against the U.S. Dollar. The USDJPY dropped below 76.00 on Oct 31st, triggering an intervention from the Japanese government.
 
Asian markets traded higher on news that Italy has chosen Mario Monti as its new leader. The Japanese Nikkei is up 1.2%, the Hang Seng is up 2.2% and the Australian S&P ASX is up 0.2%. Traders on OpenBook are primarily long on NZDUSD with average limits around 0.7980 and stops around 0.7780.