- Upbeat sentiment data from New Zealand fails to help the kiwi gather strength.
- Disappointing PMI readings from China weigh on antipodeans on Tuesday.
- The unemployment rate in New Zealand is expected to tick down to 4.2% in Q1.
The NZD/USD pair showed some sharp fluctuations in the Asian session on Tuesday as markets reacted to the macroeconomic data releases from New Zealand and China. After advancing higher toward the 0.67 handle, the pair changed its direction and quickly dropped to a daily low near mid-0.66s before retracing its daily losses in the NA session. At the moment, the pair is virtually unchanged on a daily basis at 0.6670.
The data published by the National Bank of New Zealand on Tuesday showed that the Activity Outlook and the Business Confidence indexes both improved in April while private sector credit increased by 0.3% to match the market expectation. Although the initial market reaction helped the kiwi gather strength against the greenback, the currency came under pressure after the data from China showed that the activity in the manufacturing and the service sectors expanded at a softer pace than expected in April.
However, the broad-based USD weakness on Tuesday didn’t allow the pair to continue to push lower in the second half of the day. After closing the previous day in the negative territory for the second straight time, the US Dollar Index dropped to a fresh weekly low of 97.49 earlier today as investors continued to adjust their positions ahead of tomorrow’s FOMC meeting.
Today’s data from the U.S. showed that the consumer sentiment improved in April with the Conference Board’s Consumer Confidence Index rising to 129.2 in April from 124.2 in March. Supported by that reading, the US Dollar Index recovered modestly from its daily lows and was last seen losing 0.25% on the day at 97.62.
The next catalyst for the kiwi will be the labour market data from New Zealand in the early trading hours of the Asian session. Analysts expect the unemployment rate to tick down to 4.2% in the first quarter with a 0.5% increase in employment.
Technical levels to consider
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