- NZD/USD struggles to extend two-day uptrend, firmer for the sixth consecutive week.
- Kiwi ignored risk-off mood, firmer USD amid hawkish hopes of RBNZ.
- Ukraine-Russia peace talks failed to progress, US inflation refreshed 40-year high.
- Recent NZ data are softer, second-tier US economics to decorate calendar, risk catalysts will be more important.
NZD/USD grinds higher around a four-day top, taking rounds to 0.6860-65 during the early Friday morning in Asia as more risk-negative headlines and data try to beat the bulls.
The kiwi pair surprised markets the previous day while rising amid the risk-off mood, also ignoring firmer US dollar and softer commodity prices. The reason could be linked to the hawkish hopes of a faster rate-hike trajectory by the Reserve Bank of New Zealand (RBNZ) as global policymakers prepare plans to battle the new supply chain problems caused by the Ukraine-Russia crisis.
Market players were hopeful of a positive outcome from Kyiv-Moscow talks in Ankara and initially favored the Antipodeans during early Thursday. However, a total disappointment from negotiations recently joined news that Russian forces attacked Kharkiv institute that contains an experimental nuclear reactor to weigh on the sentiment.
Also negative for the risk appetite was the ECB’s faster tapering announcement, as well as a fresh 40-year high of the US headline inflation data. That said, the European Central Bank (ECB) signaled that the Quantitative easing (QE) would end in Q3 2022 and the rates will start rising sometime after. On the other hand, US Consumer Price Index for February matched 7.9% market forecasts to renew the multi-year top.
At home, Business NZ PMI for February eased below 54.5 forecast to 53.6 whereas the Food Price Index for the said month dropped to -0.1% versus 1.3% expected. Previously, New Zealand’s Electronic Card Retail Sales slumped to -7.8% MoM from 0.0% market consensus and 2.9% revised prior.
Amid these plays, Wall Street closed in the red and the US 10-year Treasury yields rose 4.5 basis points (bps) to end the day’s trading around 1.99%. Further, prices of gold remained lackluster whereas oil dropped further on easing fears of a supply crunch.
Looking forward, headlines concerning Russia and Ukraine will be crucial for near-term directions while the US Michigan Consumer Sentiment Index for March, expected 61.3 versus 62.8 could entertain NZD/USD traders as well.
Technical analysis
A sustained run-up beyond the 100-DMA, around 0.6830 by the press time keep NZD/USD buyers hopeful.
Even so, multiple hurdles marked since late November 2021 highlight 0.6890-95 as the short-term key resistance area ahead of the 200-DMA level of 0.6925.
