- NZD/USD refreshes intraday low, snaps two-day uptrend after NZ data release.
- New Zealand Trade deficit widens as Imports grow and Exports ease in July.
- Market sentiment remains brighter amid vaccine, stimulus and tapering concerns.
- US Durable Goods Orders to decorate the calendar, Jackson Hole Symposium is the key event of the week.
NZD/USD extends consolidation of the recent gains, down 0.08% to refresh intraday low with 0.6945, following the release of New Zealand (NZ) trade numbers during Wednesday’s Asian session. The Kiwi pair rose to a one-week high the previous day amid broad US dollar weakness and upbeat market sentiment but mixed catalysts and cautious mood challenge the quote of late.
NZ Trade Balance for July came in as $-402M versus $245M prior. Details suggest that the Imports grew from $5.71B to $6.16B while Exports eased from $5.96B to $5.75B. Given the mixed data, NZD/USD sellers attack intraday low following the release. Check details here.
Not only the data but the latest singals from the RBNZ and its officials are also mixed as well. “New Zealand’s central bank decided not to raise interest rates last week because of communication challenges, not economic risks,” Assistant Governor Christian Hawkesby said per Bloomberg. However, the latest 'forward guidance' from the Reserve Bank of New Zealand’s (RBNZ) additional monetary policy (AMP) tools to battle the COVID-19 pandemic mentioned, “We committed to keep the Official Cash Rate (OCR) at 0.25 percent for a year.”
Talking about the virus conditions, New Zealand reported the highest daily jump in the current cycle the previous day to 148 cases but Prime Minister (PM) Jacinda Ardern and Deputy PM Grant Robertson pay a little heed to global directions on battling the pandemic, especially from Australia.
On the other hand, Reuters said, “The average number of deaths from COVID-19 has risen by 23% over the previous seven-day period, Dr. Rochelle Walensky, director of the US Centers for Disease Control and Prevention (CDC), during a Tuesday press call.” It’s worth noting that US Senior Health Official Dr. Anthony Fauci raised expectations to get the covid control by early next year if vaccinations ramp up. The latest move by the US Food and Drug Administration, full approval to the Pfizer-BioNTech vaccine, adds to the positives.
On Tuesday, US Richmond Fed Manufacturing Index data for August, 9 versus 25 expected, joins the first rise in the New Home Sales in four months to weigh on the push back the Fed’s tapering concerns as policymakers brace for Jackson Hole Symposium.
The recent softening of the tapering tantrum and vaccine optimism joins US stimulus news to exert downside pressure on the US Dollar, helping the equities, commodities and Antipodeans like NZD/USD in turn. That said, the US House of Representatives passed a $3.5 trillion budget and is progressing on the $1.2 trillion infrastructure plan, which in turn boosts the stimulus hopes.
Amid these plays, the US 10-year Treasury yields rose 4.2 basis points (bps) to 1.297% by the end of Tuesday’s North American session whereas the S&P 500 Futures struggle for a clear direction even as Wall Street benchmarks closed positive.
Moving on, US Durable Goods Orders for July, forecast -0.3% versus +0.9% prior, will be important for further firming up odds favoring the need for easy money policies and drag down the US Dollar Index (DXY).
Read: Durable Goods Orders Preview: The trigger for a greenback comeback?
Technical analysis
In addition to staying positive past 0.6950, NZD/USD bulls need to overcome the 20-DMA level of around 0.6975 to keep the reins.
