NZD/USD treading water in the mid-0.7100s ahead of key events this week

• NZD/USD has largely stuck to last Friday’s 0.7140-0.7180ish ranges as it awaits key events later in the week.
• Those events include Fed speakers, March US PMIs, February US Core PCE and February New Zealand trade numbers.

As has been the case for most major USD pairings on Monday, its been a subdued day for NZD/USD. The pair has stuck within last Friday’s 0.7140-0.7180ish parameters as traders look ahead to key events later in the week. Stateside, we have a heavy slate of Fed speak, as well as March PMIs on Wednesday and February Core PCE Inflation on Friday. Meanwhile, in New Zealand, we have the release of February Credit Card Spending data at 02:00GMT on Wednesday and then February trade data at the start of Wednesday’s Asia Pacific session. The New Zealand government is also expected to announce some new housing measures at some point during Tuesday’s Asia Pacific session.

As things stand right now, NZD/USD is trading in the 0.7160s, where it is very modestly higher on the day. To the upside, the main level of resistance to note are the 0.7200 level and 50 and 21-day moving averages at 0.7210 and 0.7234 respectively, whilst to the downside the main levels of support to note are this week’s 0.7140 lows and then the monthly lows around the psychological 0.7100 mark.

Driving the day

It was a solid day for global equities (the FSTE World index gained 0.4%) and though commodity markets have been a little more mixed, the bias has been to the upside – this has given marginal benefit to the kiwi. US/China headlines (the two sides did not make any strides forwards in bilateral relations in last week’s talks in Alaska, as expected, though talks were at least framed as constructive) have not impact sentiment much. As noted above, focus remains on incoming risk events, the most important of which for NZD/USD are stateside.

The kiwi has not been very responsive to the release of Westpac’s Consumer Survey for Q1 2021 which came in better than expected at 105.2 versus forecasts for a drop under 100 to 98.4. Clearly, despite the fact that Auckland has been in and out of short snap lockdowns practically every month this quarter, consumers remain confident – a confidence score of 105.2 means that while confidence is not as high as in Q4 2019 (when it nearly hit 110), it still remains comfortably within the levels it spent most of the 2018 to early 2020 period, and well above pandemic lows of 95.1.

Looking ahead, ANZ thinks that “without a firm date for a trans-Tasman bubble (TTB) and markets debating how many tourists might actually come, NZD sentiment seems less cheerful” before adding that, with New Zealand’s reopening already complete, “it just feels like NZD exceptionalism is becoming harder to identify”. Finally, the bank thinks that “the Government’s housing announcement might see the market tweak its OCR expectations, but it’s not likely to directly impact markets”.