Currently, NZD/USD is trading at 0.7215, down -0.11% on the day, having posted a daily high at 0.7227 and low at 0.7202.
NZD/USD has dropped below the mid-point of the sideways channel and is making further tracks to the downside on the back of the bid misses in retail sales Q4, a key component of the GDP, and the business manufacturing PMI data. Despite the increases we in tourist inflows and firm growth, the retail sales data was especially disappointing. Retails sales were pp 0.8% q/q and that is a miss on the expected of +1.1%. The prior was also revised lower to +0.8% from +0.9%. Business manufacturing PMI for January arrived as 51.6 vs the prior 54.5.
NZD/USD was already looking somewhat heavy while below 0.7250 and despite a softer greenback, the bird was losing momentum and the round 0.7200 level could come under pressure as we progress through the session.
NZD/USD 1-3 month:
Analysts at Westpac suggested that the month ahead could see NZD/USD extending beyond 0.7500 (Sep high) if the US dollar continues to register disappointment in the Trump Administration’s policies. "Further ahead, though, the Fed’s tightening cycle plus US fiscal expansion should maintain upside pressure on US interest rates and the US dollar, pushing NZD/USD lower to 0.7000. Granted, the NZ economy is strong and dairy prices have risen, but these forces are subservient to the US dollar’s trend."