- The NZD / USD has rebounded from lows at 0.6950, but is struggling to regain the 0.7000 level amid a buoyant dollar.
- The pair continues to feel the weight of this week’s housing announcement from the New Zealand government.
The NZD / USD It is far from the lows of 0.6950, but continues to struggle to regain the psychologically significant level of 0.7000, which now acts as resistance, having acted as a solid area of ​​support throughout the month of December. On the day, the pair is trading lower at a modest 0.1%, but on the week, the losses are closer to 2.5%. Although the week has barely passed its midpoint, the NZD / USD is already set for its worst week of losses since last September.
As a summary, this week’s losses have a lot to do with a strong recovery in the US dollar which on Wednesday saw the dollar index (DXY) rise to new yearly highs above 92.50. However, the losses arguably have even more to do with the fact that the launch by the New Zealand government of a new NZ $ 3.8 billion housing fund is seen as easing pressure on the RBNZ when it is about controlling house prices and, as a result, money market prices for the RBNZ interest rate expectations have become more moderate; This explains why the kiwi is underperforming its non-USD G10 counterparts to such a large extent on the week (AUD is down 1.5%, CAD is down 0.4%, GBP is down 1.0%, the EUR is down 0.6% for the week against the dollar).
Performance of the day
The NZD / USD continues to suffer amid the aforementioned bearish hangover, despite the lack of fresh updates from New Zealand regarding government housing or economic policy, the RBNZ or the economy, aside from trade data from February (posted during the Wednesday Asia Pacific session) that was widely ignored. Therefore, the pair has traded and is likely to continue to trade based on USD flows; The dollar has been rising on Wednesday amid a somewhat mixed tone for overall trading. Markets remain cautious amid concerns about closures in Europe and negative headlines / developments related to China and the West.
Perhaps the biggest event for the rest of the week will be US President Joe Biden’s first press conference as president on Thursday at 5:15 PM GMT. Markets will be on the lookout for more information on the upcoming fiscal stimulus package, following several reports this week suggesting it could have a total size of between $ 3 trillion and $ 4 trillion. US core PCE inflation (the Fed’s favorite inflation gauge) released on Friday will also be of interest.
US data in focus
The US data has focused on the last two hours; The durable goods orders report for February (released at 12:30 GMT) was much worse than expected, with month-on-month order growth falling 1.1% versus forecasts for a 0.8% increase and major orders a 0.9% versus forecasts for a 0.6% increase. So far, the specifics for February have been much softer than expected (remember that retail sales and industrial production also disappointed expectations). Wells Fargo attributes bad weather last month as a contributing factor to Wednesday’s disappointing durable goods data, but sees supply chain bottlenecks, which are restricting new orders, as a key problem. However, the bank still expects a strong rebound in business spending this year.
On the other hand, the US PMI Markit preliminary survey has been released and was very robust as expected; the manufacturing index rose modestly to 59.0 from 58.6 last month and the services index was in line with expectations at 60.0, an 80-month high, according to Markit. According to IHS Markit Chief Economist Chris Williamson, “Another impressive expansion in business activity in March ended the economy’s strongest quarter since 2014. The launch of the vaccine, the reopening of the economy and an additional stimulus of 1.9 Trillions of dollars helped drive demand to a degree not seen in more than six years, driving growth in orders for goods and services to multi-year highs. ” However, Chris adds, “Producers were increasingly unable to keep up with demand, mainly due to disruptions and delays in the supply chain. There have been higher prices, with inflation rates of the cost of inputs and of the sale price well above anything seen previously in the history of the survey. “
Technical levels
.
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.
