NZD/USD retreats towards 0.6300 on softer NZ Trade Balance, Fed’s Powell in focus
|- NZD/USD justifies Tuesday’s Doji formation to pare weekly gains and renews intraday low of late.
- New Zealand Trade Balance widens in May, Export and Imports rise from revised down priors.
- Cautious sentiment ahead of Fed Chair Powell’s Testimony appears to weigh on previously upbeat mood.
- NZ Credit Card Spending for May could offer immediate directions.
NZD/USD refreshes intraday low around 0.6320 as traders consolidate recent gains following New Zealand’s (NZ) downbeat trade data during Wednesday’s Asian session. Also exerting downside pressure on the Kiwi pair is the market’s anxiety ahead of the key Testimony from Fed Chair Jerome Powell.
New Zealand Trade Balance dropped to $263M MoM versus $440M prior (revised from $584M). Further details suggest that the Exports and Imports came in as $6.95B and $6.69B respectively compared to $6.16B and $5.72B revised down previous figures in that order.
Other than the NZ trade data, the mild losses of S&P 500 Futures and two basis points (bps) of a downtick by the US 10-year Treasury yields also portray the market’s cautious mood and weigh on the NZD/USD prices.
That said, the Kiwi pair rose during the last two days amid receding fears of the US recession, mainly propelled by US President Joe Biden and Treasury Secretary Janet Yellen. Wall Street’s jump after witnessing the biggest weekly loss in two years also favored the NZD/USD buyers.
Additionally, downbeat US data added strength to the Kiwi pair as the US Existing Home Sales dropped to the lowest levels in two years when talking the annualized number. On the same line, the Chicago Fed National Activity Index also dropped to 0.01 in May versus a revised down 0.04 prior.
It should be noted that the hawkish Fedspeak probed the NZD/USD bulls. On Tuesday, Richmond Federal Reserve President Thomas Barkin said that there will be no rapid return for the U.S. economy to the experience of the previous decade of stable growth, jobs and inflation, Reuters reported.
To sum up, NZD/USD pair portrays the market’s anxiety as Fed Chair Powell has a tough task to justify the biggest rate hike since 1994 while also balancing the growth optimism. On an immediate basis, NZ Credit Card Spending for May, expected 2.0% versus 1.1% prior, will be important to watch.
Technical analysis
Tuesday’s Doji formation, as well as the sustained trading below the 21-day EMA level of 0.6380, keeps NZD/USD sellers hopeful to visit the yearly low surrounding 0.6200.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.