NZD/USD extends corrective bounce towards 0.6250 despite mixed NZ trade data, Fed’s Powell eyed
|- NZD/USD picks up bids to extend late Thursday’s rebound despite mixed NZ trade numbers.
- New Zealand Trade Balance improves on MoM but eases on YoY, Imports drop while Exports grow in April.
- Hopes of no US default, hawkish Fed bets favor greenback bulls but upbeat NZ budget, RBNZ expectations favor Kiwi bulls.
- New Zealand Credit Card Spending, Fed Chair Powell’s speech will be important for intraday directions.
NZD/USD renews its intraday high near 0.6240 as it stretches the late Thursday’s rebound despite mixed New Zealand trade numbers on early Friday. Even so, a firmer US Dollar and hawkish hopes from the Fed, as well as a cautious mood ahead of the key data/events, prod the Kiwi pair buyers.
That said, New Zealand’s headline Trade Balance improves to $427M MoM in April from $-1586M prior but eased on YoY to $-16.8B versus $-16.76B previous readings. That said, Imports dropped to $6.38B from $7.87B (revised) whereas Exports increased to $6.8B versus $6.28B prior (revised).
Apart from the mixed NZ trade numbers, the recent hawkish expectations from the Reserve Bank of New Zealand (RBNZ), mainly due to the previous day’s New Zealand (NZ) annual budget, also propel the NZD/USD prices of late.
In the no-frills budget for 2023, the New Zealand (NZ) Treasury expects the economy to avoid recession while also anticipating a return to budget surplus delayed one year to 2026. While announcing the annual budget, NZ Finance Minister Grant Robertson also said, “Recent widening of current account deficit expected to reverse.”
“Yesterday’s Budget announcement resulted in a significant lift in expected bond issuance in order to fund the additional spending,” said Analysts at the ANZ.
On the other hand, the US Dollar Index (DXY) jumped to the highest levels since March 20 while the US 10-year and two-year bond coupons jumped to the March 15 tops. That said, Wall Street closed on the positive side amid cautious optimism in the market.
While tracing the US dollar gains, upbeat Treasury bond yields, amid hawkish Fed bets and favorable data at home gain major attention. On the same line are concerns that the US policymakers will be able to extend the debt ceiling after the latest positive comments from them.
Moving on, New Zealand Credit Card Spending for April and Fed Chairman Jerome Powell’s speech will be important to watch for NZD/USD pair’s immediate directions. However, major attention will be given to the US debt ceiling negotiations as President Joe Biden said to have a decision to avoid a default by Sunday. Following that, the next week’s RBNZ decision will be the key for the Kiwi pair.
Technical analysis
Although the 21-DMA defends NZD/USD bulls around 0.6225, the Kiwi pair buyers need validation from the 100-DMA hurdle surrounding 0.6275.
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