NZ dollar rally takes breather
|The New Zealand dollar has posted limited losses in the Friday session. Currently, NZD/USD is trading at 0.7160, down 0.13% on the day. It has been an excellent week for NZD/USD, which has gained 1.86%.
New Zealand Manufacturing PMI shines
New Zealand wrapped up the trading week with an excellent reading from Manufacturing PMI for March. The index rose to 63.6, up sharply from 53.4 beforehand. This was the highest monthly result since the survey began in 2022, and points to stronger demand.
New Zealand’s export-reliant economy is benefitting from an improving global economy. China is one of New Zealand’s largest trading partners, and the Asian giant is showing strong growth, and with it an increased demand for imports from New Zealand and elsewhere. China’s GDP in the first quarter jumped by 18.3% compared to a year earlier. This marked a record quarter, but of course, it needs to be remembered that this is due to a low comparison base, as the economy was experiencing a downturn a year ago, due to the Covid-19 pandemic. China is expected to show solid growth in 2021, which should translate into stronger demand for New Zealand exports and bodes well for the New Zealand dollar.
The economy has recovered nicely from the Covid pandemic, but at the same time, the New Zealand central bank remains cautious and in a dovish mood. At this week’s policy meeting, members held the Overnight Cash Rate at 0.25%, a record low. The RBNZ added that if needed, it was prepared to lower rates even further. The bank kept its QE programme (LSAP) unchanged and noted that it will take “considerable time and patience” before it reaches its inflation and employment goals.
NZD/USD technical
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NZD/USD is testing resistance at 0.7144. This is followed by 0.7212, an important monthly resistance line.
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There is support at 0.6998. Close by, we have support at 0.6961.
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