NZD/USD grinds near 0.6400 on mixed NZ data, focus locked on China/US statistics

• NZD/USD struggles to extend three-day uptrend, eyes to snap seven-week uptrend.
• New Zealand Manufacturing Sales improved in Q3, Electronic Card Retail Sales came in mixed for November.
• Anxiety ahead of the key data/events keeps traders on dicey floor, light macro also contributes to market’s inaction.
• China inflation, US Michigan Consumer Sentiment Index will entertain traders ahead of the busy next week.

NZD/USD makes rounds to 0.6380 during Friday’s Asian session, after rising in the last three consecutive days, as mixed data from New Zealand (NZ) probes the Kiwi pair traders. Also likely to have challenged the bulls is the cautious mood ahead of the key statistics from the US and China, as well as the pair’s first weekly loss in eight.

New Zealand’s Electronic Card Retail Sales rose more than 0.2% to 0.3% MoM in November, versus 1.0% prior, whereas the YoY figures eased to 7.1% from 12.9% market consensus and 16.6% previous readings. Further, the nation’s Manufacturing Sales for the third quarter (Q3) surprised markets with 3.1% growth compared to -2.4% forecasts and -4.1% prior.

Elsewhere, the US Dollar weakness joined the likely improvement in Sino-American relations and China’s gradual easing of the Zero-Covid policy to favor the bulls. However, the fears emanating from Russia and hopes that the US economic recovery could allow the Federal Reserve (Fed) to remain hawkish in the next week seem to probe the NZD/USD bulls.

US Dollar Index (DXY) dropped for the second consecutive day on Thursday, paring the first weekly gain in three, even as the benchmark United States 10-year Treasury bond yields recovered from the lowest levels since mid-September. That said, the greenback’s gauge versus the six major currencies remains pressured around 104.80 by the press time.

The DXY losses could be linked to the recently downbeat statistics from the world’s biggest economy.  On Thursday, US Initial Jobless Claims matched 230K market consensus for the week ended on December 02, versus the upwardly revised 226K prior. Further, the four-week average also printed 230K figure compared to 229K previous readings. Earlier in the week, the US Goods and Services Trade Balance deteriorated to $-78.2 billion versus $-79.1 billion expected and $-73.28 billion prior. Further, the final readings of the Unit Labour for Q3 eased to 2.4% QoQ versus 3.5% first estimations.

Elsewhere, Shanghai City Authorities mentioned that they will stop requiring Covid test checks for restaurants or entertainment venues from this Friday. On the same line, the South China Morning Post (SCMP) states that Hong Kong is ‘to ease isolation rules’ for infected travelers, with a release on the fifth day.

Also, China Premier Li Keqiang said, “Growth will continue amid the implementation of optimized pandemic policies.” The policymaker also stated, “Will keep yuan exchange rate basically stable.”

Recently, US Treasury Secretary Janet Yellen said on Thursday that "Recession is not inevitable," while also declining to say whether the dollar had peaked against other currencies.

Amid these plays, S&P 500 Futures print mild gains while Wall Street closed positive on Thursday.

Moving on, the scheduled top-tier readings from China and the United States could entertain NZD/USD traders. That said, China Consumer Price Index (CPI) is expected to repeat 0.1% MoM figure in November but is likely to ease to 1.0% YoY versus 2.0% previous readings. Further, the Producer Price Index (PPI) could decline to -1.5% compared to -1.3% prior during the stated month. Additionally, the preliminary readings of the Michigan Consumer Sentiment Index for December, expected 53.3 versus 56.8 prior, will entertain NZD/USD traders afterward. Also important to watch will be the University of Michigan’s (UoM) 5-year Consumer Inflation Expectations for the said month, 3.0% previous readings.

Technical analysis

NZD/USD pair’s rebound from 0.6300 enables it to again aim for the 0.6470-75 key hurdle, comprising tops marked in August and December.