NZD/USD: Greenback weakness, Brexit optimism offer positive start, all eyes on China data
|- NZD/USD trades near 0.6860 during early Thursday.
- The USD weakness and market optimism offer a good start to the day.
- Traders still await China data for fresh impulse.
NZD/USD is on bids near 0.6860 at the start of Asian trading on Thursday. The quote took advantage of greenback weakness and overall market optimism surrounded by Brexit news. However, buyers still await China’s data concerning industrial production, retail sales and fixed asset investment to validate the move.
The US Dollar Index (DXY) recently dropped to the lowest in two weeks after the latest stats concerning durable goods orders and producer price index (PPI) joined the league of soft figures. The US core durable goods orders declined to -0.1% MoM in January against +0.1% forecast and upwardly revised prior reading on +0.3% whereas PPI ex-food and energy grew less than market consensus and previous outcome of +2.6% to +2.5%.
In addition to the USD weakness, market optimism due to positive news from the UK can also be considered as a support for the Kiwi strength. Having rejected British Prime Minister Theresa May’s second Brexit proposal, members of the UK parliament (MPs) voted in favor of not to leave the EU without any deal. As a result, chances of soft Brexit and a possible delay to the March 29 deadline, for which there will be a vote a today, backed commodity bulls.
Also, BNZ’s report turning down chances of a rate cut from RBNZ also pleased buyers. The bank said, “Without a drought (unlikely) or a major external shock (plausible) we see no reason for the RBNZ to cut rates. It looks unlikely to us that the unemployment rate will deviate significantly from a level considered consistent with maximum sustainable employment nor will annual CPI inflation deviate significantly from target. Unless these things happen then an Australian rate move in and of itself should not generate an RBNZ response.”
Investors now await China’s data-dump to determine immediate moves. Forecasts suggest the retail sales (YoY) to soften to 8.1% from 8.2% during January and the industrial production to also follow the suit with 5.5% growth against 5.7% prior. Though, fixed asset investment (YTD) is expected to strengthen to 6.0% from 5.9% in January if looking on a yearly basis.
NZD/USD Technical Analysis
NZD/USD is still left to conquer multiple resistances around 0.6875 and 0.6905/10 in order to aim for February highs near 0.6945.
On the downside, 50-day simple moving average (SMA) at 0.6810 can offer immediate support, a break of which can recall 0.6770 on the chart.
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