- The NZD is outperforming in tandem with its commodity-sensitive G10 peers, despite little commodity-inspired price action on the day.
- NZD/USD is at session highs near the 0.6870 area and points to a break towards resistance above 0.6900.
The NZD is outperforming some of its more commodity-sensitive G10 peers like the Aussie and Loonie on Thursday, even though price action across most of the commodity space has not been hugely bullish in the day. The NZD/USD It is currently trading just below the 0.6870 level and at session highs, up nearly 0.9% from previous session lows at 0.6810 and rising 0.5% from Wednesday’s closing levels of 0.6835. If the pair can break above intraday resistance at 0.6870, technicians believe that could open the door for a pullback to previous weekly highs at 0.6925.
With traders seemingly focused on recent spikes in prices for New Zealand’s main commodity exports (agricultural produce) rather than evidence of economic weakness last month to reflect rising Omicron infection rates, the NZD uptrend may have more legs. For reference, spending on electronic cards fell 7.6% month-on-month in February, with analysts at Westpac saying “jitters related to Omicron are likely to remain a drag on spending for some time.”
NZD/USD also appears protected by high US inflation (Thursday’s data showed CPI hitting new four-decade highs in February) and subsequently Fed tightening expectations for further expectations. aggressive for RBNZ policy tightening. According to Reuters, money markets imply an 85% chance of a 50bp rate hike to 1.5% next month and then 2.0% in July. The RBNZ has signaled that it intends to take interest rates above the “neutral rate” and recent geopolitical events and the impact on commodity markets are likely to strengthen this conviction.
Additional technical levels
Source: Fx Street
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
