NZD/USD experienced a slight increase before retracing its gains. Analysts from BBH noted that New Zealand’s Q4 retail sales data exceeded expectations.
Retail sales volume rose by 0.9% quarter-on-quarter, against an anticipated 0.5% and a prior quarter’s figure of 0%. The Reserve Bank of New Zealand (RBNZ) indicated a gradual pace of easing, planning for 75 basis points of reductions over the next year, with a target policy rate of 3.00%.
In other market movements, EUR/USD gained traction after reaching lows, while GBP/USD fluctuated around 1.2630. Gold prices approached record highs near $2,955 per ounce, amid mixed signals in the US dollar. Bitcoin continues to consolidate between $94,000 and $100,000, with recent investor outflows indicating reduced institutional demand.
This recent lift in the New Zealand dollar was short-lived, with traders swiftly taking profits as the market adjusted its stance. The better-than-expected retail sales figures for the fourth quarter provided temporary support, though the broader sentiment remains tied to monetary policy expectations. The Reserve Bank of New Zealand has reaffirmed that rate cuts will be spaced out, aiming for a total reduction of 75 basis points over the coming year. Markets have mostly priced this in, making further upside dependent on shifting expectations around inflation or global demand trends.
On the currency front, strength in the euro suggests that buyers stepped in following a period of weakness. Sterling’s hesitancy around 1.2630 reflects uncertainty, with traders weighing economic conditions against central bank rhetoric. Movements in both pairs underline how market participants remain reactive rather than proactive, with price action responding sharply to incoming data rather than setting firm directional trends.
Gold’s march towards an all-time high highlights its role as a preferred hedge amid fluctuating US dollar dynamics. While upward momentum remains intact, traders should watch for any profit-taking as new highs are tested. Meanwhile, Bitcoin’s range between $94,000 and $100,000 signals a battle between large buyers and sellers, with recent capital outflows suggesting that major investors have been pulling back.
For the near term, those dealing in derivatives should remain alert to shifts in rate expectations, particularly from central bankers who continue to influence volatility. Sentiment around inflation and policy adjustments will guide flows across asset classes, with traders needing to balance short-term moves against longer-term positioning. Keeping an eye on institutional behaviour in crypto and metals markets will also provide useful clues about where capital is flowing next.
