NZD/USD teases weekly top below 0.7100 on subdued NZ data, sluggish markets
|- NZD/USD bulls catch a breather following four-day uptrend.
- Westpac’s quarterly Employment Confidence Index jumped to 103.90, NZ Trade Balance
- Risk appetite dwindles Fed’s removal bank restrictions battle Biden’s stimulus passage.
- Second-tier data from the US will join covid, China and Fedspeak to keep markets active.
NZD/USD seesaws around the week’s top, recently easing to 0.7060, amid a sluggish Asian session on Friday. Although upbeat market sentiment favored Antipodeans earlier, recently mixed catalysts stop the kiwi pair from further advances of late.
Among them, contrasting figures of New Zealand’s (NZ) Trade Balance on the monthly and the yearly basis joins the recent challenges to the previous risk-on mood. Even so, upbeat NZ employment signals keep the buyers hopeful.
New Zealand Trade Balance for May dropped to NZD -0.062B from $+0.764B on YoY but the monthly outcome improved from NZD 414M to NZD 469M. Further, Exports grew from NZD 5.40B to NZD 5.86B while Imports jumped from NZD 4.986B to NZD 4.398B.
Additionally, Westpac’s quarterly details of the New Zealand Employment Confidence Index rose 4.4 points to 103.9. The bank also mentions, “New Zealanders' confidence about labor market conditions is back to around where it was before Covid-19 intervened. The most notable result from the June survey was a strong lift in perceptions about current job opportunities, which are now above the pre-covid level.”
Elsewhere, market sentiment dwindles after the initial positive reaction to the passage of US President Joe Biden’s infrastructure spending and softer data easing pressure off the Fed policymakers. The latest cautious mood could be linked to the Fed’s removal of share purchase and dividend limits on the large US banks after they pass the recent stress tests.
Against this backdrop, S&P 500 Futures struggle to extend the latest run-up beyond record tops whereas the US Treasury yields remain subdued by the press time.
Given the lack of major data/events left for publication ahead of the US session, NZD/USD traders may witness consolidation of the recent gains should market sentiment deteriorates further. For that, headlines relating to China and the covid may play their roles.
Technical analysis
A daily closing beyond the 200-day SMA level of 0.7050 enables NZD/USD to aim for January-March lows near the 0.7100 threshold but multiple hurdles beyond the same test the Kiwi pair bulls.
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