- NZD/USD consolidates early-week losses, eases from intraday top off-late.
- US dollar weakness, stronger NZ economy and fewer hurdles for RBNZ favor bulls.
- New Zealand PPI Input eased, Output grew in Q4 2020.
- Light calendar, except for Aussie Retail Sales, can highlight China market moves, Wednesday’s RBNZ is the key.
NZD/USD eases from recent tops around 0.7225 to 0.7220 amid the initial Asian session trading on Friday. Before recently stepping back, mainly due to the mixed data at home, the kiwi pair benefited from the US dollar’s downside while cheering the return of China the previous day. However, the bulls are cautious amid a lack of fresh directives at home before next week’s monetary policy meeting of the Reserve Bank of New Zealand (RBNZ).
New Zealand’s fourth quarter (Q4) Producer Price Index Output grew more than -0.3% initial forecasts to 0.4% whereas the Input dropped below 0.6% to 0.0% during the stated period.
Despite the sluggish economy, more like the US data, New Zealand (NZ) is better at recovering from the coronavirus (COVID-19) pandemic and has recently overcome the snap lockdown. However, the latest fears of the tussle with China and surge in the US Treasury yields may warrant the policymakers to remain cautious during the next week’s monetary policy meeting.
Against this backdrop, the Australia and New Zealand Banking Group said, “We expect the bank to strike a balanced tone, acknowledging the better run of data while remaining cautious about the downside risks. That speaks to NZD elevation rather than further rallies, especially given how much good news is now priced in.”
Over the counter, US weekly Jobless Claims dropped and the housing market indicators flashed mixed readings whereas the Philadelphia Fed Manufacturing Index came out strong in their latest releases. However, the US dollar dropped the heaviest in over a week as the Treasury yields remained pressured for one more day after refreshing the multi-month top earlier in the week.
Also challenging the sentiment could be the absence of any major progress on the US covid stimulus as well as recent chatters surrounding the vaccines’ inability to combat the virus variants, especially from South Africa.
Amid these plays, Wall Street benchmarks closed in red whereas commodities traded mixed amid economic recovery doubts while the Antipodeans benefited from the greenback weakness.
Looking forward, Australia’s preliminary Retail Sales for January, prior 0.2%, may entertain kiwi traders amid a lack of major data/events at home. However, updates from China and forecasts concerning the RBNZ may offer intermediate moves to the NZD/USD pair before the US preliminary activity numbers for February start rolling out later in the day.
Technical analysis
Repeated bounces off 50-day SMA, at 0.7177 now, direct NZD/USD bulls towards an ascending resistance line from January 11, currently around 0.7255.
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