- NZD/USD found decent support above 0.7000 and has managed to recover to trade flat on the day above 0.7050.
- The pair did not react to news of a quarantine-free travel corridor between Australia and New Zealand from 19 April.
NZD/USD bulls will be encouraged by the day’s price action; the pair dropped to lows of just above the 0.7000 level during the European morning but has since been able to advance back above 0.7050. Short-term bulls may see the support the pair got at the 0.7000 level as a bullish signal and are likely to take aim at Monday’s 0.7070 highs, ahead of a move towards the NZD/USD’s 21-day moving average at 0.7090. On the session, the pair trades flat, with the recent recovery from just above 0.7000 only managing to take the pair back in line with Tuesday Asia Pacific session levels close to 0.7060.
Driving the day
FX markets have been mixed on Tuesday, with the USD experiencing mixed fortunes versus its major G10 counterparts; CHF, EUR, JPY and to a lesser extent, AUD have been able to make solid gains versus the buck, while CAD and GBP have lost ground. The kiwi has been caught in the middle, hence why it trades flat on the session.
In terms of fresh news out of New Zealand; PM Jacinda Ardern announced that a new quarantine-free travel bubble with Australia will begin on 19 April, something which she said will provide a welcome boost to the country’s economic recovery. Passengers will not be allowed to travel if they are experiencing cold or flu symptoms, however. The news has failed to give NZD a meaningful lift. Elsewhere, the results of the latest GlobalDairyTrade auction were released on Tuesday; Diary prices rose 0.3% since the last auction two weeks earlier; not a reading to get especially excited about, but NZD traders will be relieved to see Dairy prices continuing to consolidating close to recent highs, having surged 36% since mid-November 2020 (during which time the arrival of vaccines has boosted global economic recovery expectations and sent commodity prices more broadly shooting higher).
Looking ahead, the main event of the week in New Zealand will be the release of the latest ANZ Business Confidence and Activity Outlook indices for the month of April on Thursday, a timely update on the state of the kiwi economy. Meanwhile, the focus stateside will be on the Fed, with Chairman Jerome Powell slated to speak on Thursday following the release of the FOMC minutes of the March meeting on Wednesday. March Producer Price Inflation, released on Friday, will also be of note to USD traders, with recent data pointing to the ongoing presence of supply shortages and supply chain disruptions in the manufacturing sector that may introduce some upside risk to producer price inflation.