- NZD/USD attacks the lower end of immediate trading range.
- New Zealand Electronic Card Retail Sales eased in May.
- Anxiety ahead of US inflation data, G7 joins escalating Sino-American tussles to favor bears.
- US CPI should remain near the consensus to keep Fed hopeful.
NZD/USD remains pressured around 0.7170 inside a 20-pip trading range below 0.7180 during Thursday’s Asian session. The kiwi pair portrays the sluggish market sentiment, also responding to the downbeat data and risk-off catalysts, to print a three-day south-run by the press time. However, a lack of major data/events in Asian and pre-US CPI caution can keep troubling the traders going forward.
New Zealand’s Electronic Card Retail Sales eased to 1.7% and 18.1% in MoM and YoY in May, versus 4.4% and 108.7% priors in that order. On Wednesday, ANZ Business Confidence dropped below 1.8 to -0.4 but the Activity Outlook improved from 27.1% to 29.1% for June. Also, New Zealand’s Q1 Manufacturing Sales remained mostly unchanged near 0.4% compared to 0.5% previous readouts.
Other than the mixed data, market players’ confusion over the US Federal Reserve’s (Fed) next moves also weighs on the NZD/USD prices. Although the early signals of the key US inflation figures have already posed upside risk, the Fed maintains the view of the price uptick to be temporary and hence today’s CPI becomes crucial as it precedes the next week’s Federal Open Market Committee (FOMC) meeting.
It’s worth noting that the risk appetite also waned over the US-China tussles. After the US passage of a bill to compete with Chinese technology companies, the latest market chatters suggest the Group of Seven (G7) meeting to push for another global examination for covid origin, which in turn points toward Beijing.
Amid these plays, US 10-year Treasury yields dropped to the two-month lows, helping the US dollar, but the Wall Street benchmarks and S&P 500 Futures remain indecisive. The same confuses commodities and Antipodeans, including the NZD/USD pair.
Given the light calendar in Asia, NZD/USD traders should rely on the risk catalyst for fresh impulse.
Read: US CPI May Preview: Inflation angst is coming
Technical analysis
A confluence of 50-day and 100-day SMA near 0.7180-85, followed by a downward sloping resistance line from May 26 near 0.7220, directs NZD/USD towards an 11-week-old support line near 0.7140.
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