- NZD/USD stays defensive after three-week downtrend, pares recent losses amid a quiet session.
- New Zealand Business PSI rose past 52.2 prior to 55.2 in May.
- Hawkish Fed, recession fears favor US dollar, news from China probe Kiwi bears.
- Light calendar highlights the risk catalysts for fresh impulse.
NZD/USD grinds higher around 0.6320 while consolidating the previous three-week advances during Monday’s Asian session. The kiwi pair’s latest gains could also be linked to New Zealand’s services activity data for May, as well as headlines from China.
New Zealand’s Business NZ PSI for May rose past 52.2 prior reading to 55.2. The private activity data joins upbeat figures of Business NZ PMI data flashed the last week, which in turn propel the hopes of another hawkish surprise from the Reserve Bank of New Zealand (RBNZ).
A piece of news from Reuters saying, “President Joe Biden's administration is reviewing the removal of some tariffs on China,” joins upbeat news from Beijing that suggests receding covid fears to favor the NZD/USD pair’s rebound.
Furthermore, Friday’s downbeat US data offer additional upside momentum to the Kiwi pair. That said, US Industrial Production for May dropped to 0.2% MoM, below 0.4% market forecast and 1.4% prior. The details suggested steady Capacity Utilization and a contraction in the manufacturing output. While the US data were softer, the Federal Reserve’s (Fed) bi-annual Monetary Policy mentioned the Gross Domestic Product (GDP) appears to be on track to rise moderately in the second quarter, per Reuters.
It should be, however, that China’s testing of anti-ballistic missile and hawkish Fedspeak are some of the main clues that exert downside pressure on the NZD/USD prices. Recently, Federal Reserve Governor Christopher Waller mentioned that he will support a 75 bps interest rate hike in July policy if data matches his expectations.
Amid these plays, the US equities marked an unconvincing relief rally while the Treasury yields were also sluggish.
Looking forward, Testimony from Fed Chairman Jerome Powell become this week’s key event amid a light calendar at home. That said, today’s interest rate announcement from the People’s Bank of China (PBOC) could also entertain NZD/USD traders if managed to surprise the markets with any rate change.
Technical analysis
Despite the corrective pullback, NZD/USD battles the 10-DMA immediate hurdle surrounding 0.6330, a break of which could direct the quote towards early June’s swing low near 0.6360. Until then, the Kiwi pair is likely to remain directed towards the yearly low marked in the last week around 0.6195.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.