June NZ Electronic Card Transactions

July 10, 2019

By Orbex

After the RBA cut rates twice in a row, all eyes are now on the RBNZ to see if they will follow suit. Given how close the economies are connected, and that the economic figures have been following the same path, it’s not unlikely to expect that the central banks would have similar policies.

The RBNZ was the first to pull the trigger but has since held fast while the RBA cut. There is an increasing consensus that August will have what analysts are calling the “first” rate cut for the remainder of the year. This, of crouse, implies that there will be more than one.

However, there is still a lot of data coming up before the next meeting in August. So, the market is going to be looking really closely at the data to see if the RBNZ will take the same route as the RBA.

The Data

Tomorrow we get the first important data that could give us some insight into what might happen with the rates. Electronic Card Retail sales data is the proxy for consumer sentiment that Kiwi followers use. It also gives us some insight into what to expect from inflation.

Let’s not forget that later in the month, we’ll also be getting quarterly consumer sentiment and CPI, two important data points that could certainly sway the RBNZ.


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With the release tomorrow, we get the full set of reports for Q2 to see how retail sales have been doing. This is why this data point might be extra important this time around.

What We Are Looking For

Expectations are for card transactions to stay in negative growth for the second consecutive month at -0.1%. However, this would be an improvement over the -0.5% of the prior month. This would bring annual growth to just 0.7%, compared to 3.2% registered the last time around.

Electronic card sales have been bouncing around since the beginning of the year and failing to maintain consistent growth. Many see that as a reflection of a lack of consumer confidence in line with the lack of business confidence seen in the country of late.

What to Expect from the Markets

Given the wealth of poor data from New Zealand lately, a positive surprise from the data series might help give the Kiwi some support. A result worse than -0.5% of last month could be affirm the negative growth trend, and negatively impact the currency.

If two months of electronic card transactions come in negative, especially if the last one is below -0.4%, then we could expect disappointing results from consumer confidence. Just as importantly, inflation could slip lower. This would put pressure on the RBNZ to take further action.

The Government Weighs In

In that line of thinking, recently, the NZ government has been taking credit for the low dollar. They affirmed that they were interested in reviewing the Reserve Banking Act.

Politically, the exchange rate is seen quite positively, especially with the current high price of dairy. However, these positives for the economy are not reflected in other data. This means that even these tailwinds aren’t enough to help the economy.

With New Zealand now officially in winter, we are getting the underlying economic data without the positive distortion of record tourist arrivals. If the data doesn’t pick up soon, we might be in for a series of depressing economic data until November, when the tourist season picks up again.

By Orbex