NZD/USD: Remains in the red despite above-forecast China data, NZ PM dumping CGT
- Kiwi's recovery seems to have stalled near 0.6730 despite a better-than-expected China data release.
- New Zealand has categorically rejected the capital gains tax. Still, the NZD is struggling to pick up a bid.
The NZD/USD pair is struggling to extend recovery despite signs of revival in China's factory sector and the New Zealand government's decision to scrap capital gains tax (CGT).
The kiwi, which fell to a low of 0.6665 earlier today in response to below-forecast New Zealand inflation figure, trimmed losses in the run up to China data release. The recovery, however, seems to have stalled near 0.6730. As a result, the NZD/USD is still down 0.55 percent on the day.
The struggle to extend the recovery rally is somewhat surprising as China's data released at 02:00 GMT showed the annualized growth rate steadied at 6.4 percent in the first quarter, s opposed to the expected slowdown to 6.3 percent. More importantly, retail sales bettered estimated by printing at 8.7 percent - a sign domestic demand rose in March (good for NZ exports).
Industrial production growth surged to 8.5 percent, beating the expecting rebound from 5.3 percent to 5.9 percent by a big margin.
Further, the New Zealand PM announced a few minutes before press time there was no mandate - and no consensus - for a CGT.
Even so, the Kiwi continues to trade in the red. The weaker-than-expected New Zealand CPI released earlier today seems to have boosted RBNZ rate cut bets.
The currency pair will likely trade in the red for the rest of the day, although the daily losses could be much lower than the current -0.55 percent if the global equities cheer China data. As of writing, the futures on the S&P 500 are reporting a 0.12 percent gain.
NZD/USD Technical Levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
