NZD/USD has seen gains, trading around 0.5750 after a 0.9% increase in Retail Sales for Q4 2024, the highest growth in three years. This rise surpasses the prior flat reading and forecasts of 0.6%.

The Chinese government released its annual policy statement focusing on rural reforms, which may support the New Zealand economy, given China’s role as a major trading partner. However, potential limitations on Chinese investments in the US may cap NZD gains.

The US Dollar Index is below 106.50, impacted by the recent drop in the Composite PMI to 50.4 in February. Meanwhile, Manufacturing PMI increased to 51.6, contrasting with a decline in Services PMI to 49.7.

Retail Sales in New Zealand have surged by 0.9% for the final quarter of 2024, marking the strongest expansion in three years. This figure easily beats both the prior stagnant reading and the anticipated 0.6% increase. Such an improvement indicates healthier consumer spending, which often points to rising confidence among households. Though this data suggests a positive trend, it is worth considering whether this momentum can be sustained in the coming quarters.

Meanwhile, Beijing’s latest economic policy statement places rural reforms at the forefront. With China holding a vital position as one of New Zealand’s largest trade allies, this move could bolster demand for exports. Nonetheless, external risks remain. If Chinese investment faces tighter restrictions in the US, overall financial flows may weaken, potentially restraining gains elsewhere.

On the US side, the Dollar Index sits below 106.50, after a drop in Composite PMI to 50.4 in February. A closer look at sector-specific figures shows that while Manufacturing PMI edged up to 51.6, the Services PMI slipped to 49.7. This divergence suggests an ongoing shift in economic activity, with services facing more pressure. For those watching rate expectations, signs of softness in services may fuel discussions about future monetary adjustments.

Taken together, improving retail conditions in New Zealand, changing Chinese policies, and mixed signals from the US economy add layers of complexity to market positioning. A careful eye on follow-up data will be key, particularly for gauging whether economic momentum continues or fades.