- Soft US core inflation boosts NZD/USD but bears took it as a selling opportunity.
- The dovish comments of the Reserve Bank of New Zealand (RBNZ) weaken the NZD.
The NZD/USD is trading at around 0.6947 down 0.53% on Thursday.
Overnight the kiwi gapped down 25 pips on the back of RBNZ comments while in the American session the pair got boosted to 0.6970 by softer US core inflation.
The commodity-linked currency NZD is following the AUD, gold and copper prices which all got a boost on Thursday.
Earlier, the US core Consumer Price Index year-on-year for April came below expectations at 2.1% versus 2.2% forecast by analysts. However, the data is still above the 2% Fed’s inflation target and should not jeopardize the USD bull trend.
In New Zealand, the current 1.75% OCR (Overnight Cash Rate) was last changed in November 2016 and the Bank announced that it will keep it on hold for ” a considerable period of time.” The new RBNZ Governor Adrian Orr additionally said: “The direction of our next move is equally balanced, up or down. Only time and events will tell.”
Regarding inflation Governor Orr said: “Consumer price inflation remains below the 2% mid-point of our target due, in part, to recent low food and import price inflation, and subdued wage pressures.”
Meanwhile, the US Dollar Index, which gauges the greenback relative to a basket of currencies has almost recovered most of its intraday losses and is en route towards the 93.00 psychological level.
NZD/USD 4-hour chart
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The main trend is bearish as the market is trading below the 50, 100 and 200-period simple moving average on the 4-hour chart. The bears will likely meet support at the 0.6900 cyclical low and at 0.6850 psychological level while to the upside resistances are seen at 0.6985 swing low, the 0.7000 handle and at the 0.7050 swing high.
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