NZD/USD fails to cheer upbeat NZIER QSBO around 0.6150 amid sluggish markets

NZD/USD remains sidelined near 0.6150 despite upbeat business confidence from New Zealand, after refreshing a one-week high around 0.6170, as market players await the key Reserve Bank of Australia (RBA) decision amid early Tuesday. Apart from the pre-RBA anxiety, the US Independence Day holiday also restricts the Kiwi pair’s reaction to the data.

That said, the New Zealand Institute of Economic Research's (NZIER) quarterly survey of business opinion (QSBO), mostly known as NZIER Business Confidence, improved in the second quarter to -63.0% versus -66.0% prior. The reason could be linked to the deterioration in the Capacity Utilization data, down to 81.7% versus 94.0% prior. NZIER said, per Reuters, "While demand continues to soften, the marked decline in capacity utilization amongst builders and manufacturers and the proportion of firms reporting difficulty in finding labour, especially unskilled labour, point to a considerable easing in capacity pressures in the New Zealand economy." The news also quotes NZIER report saying that the downbeat mood was broad-based across sectors, but retailers are particularly bearish about the general economic outlook.

It’s worth noting that upbeat New Zealand Building Permits and risk-on mood joined hawkish hopes from the RBA to propel the NZD/USD price on Monday. That said, the NZ Building Permits improved to -2.2% MoM for May from -2.6% prior. 

Apart from that, the downbeat US data and hopes of an improvement in the US-China ties also underpinned the NZD/USD run-up the previous day.

On Monday, US ISM Manufacturing PMI for June dropped to the lowest level in three years, as well as stayed below the 50.0 level for the seventh consecutive month, as it marked a 46.0 figure versus 47.2 expected and 46.9 prior. Further, S&P Global Manufacturing PMI for June confirmed 46.3 figures, the lowest in five months, whereas the Construction Spending improved 0.9% MoM for May, versus 0.5% expected and 0.4% previous readouts.

Amid these plays, Wall Street closed on the positive side and the yields grind higher while the US Dollar Index (DXY) dropped for the second consecutive day.

Moving on, NZD/USD traders should pay attention to the RBA details and risk catalysts for clear directions amid the US holiday. Markets expect the RBA to keep the rates unchanged after two consecutive hawkish surprises and due to the softer inflation data. However, there is a thin line among the hawks expecting RBA’s 0.25% rate hike and no rate change, making the event more interesting.

Technical analysis

Although the 21-DMA breakout lures the NZD/USD buyers, the 200-DMA level of around 0.6170 limits the Kiwi pair’s immediate upside. Following that, a two-month-old descending resistance line, close to 0.6190 will be in the spotlight.