The New Zealand dollar is in positive territory in the Monday session. Currently, NZD/USD is trading at 0.7186, up 0.17% on the day.
NZD looked strong throughout last week, but surrendered most of these gains on Friday, as the pair slid 0.74 per cent. It was a combination of economic data and US Treasury yields that sent the pair sharply lower to end the week. The BusinessNZ Manufacturing Index slowed to 53.4 in February, down from 57.5 beforehand. This points to weaker growth in the manufacturing sector. In the US, UoM Consumer Sentiment jumped to 83.0 in February, up from 76.2 a month earlier. The reading was much stronger than the estimate of 78.5 and was its highest level in 12 months. According to Surveys of Consumers chief economist Richard Curtin, the strong reading was a result of the increasing number of vaccinated Americans, as well as anticipation over the Biden stimulus package. Meanwhile, US 10-year yields rose higher on Friday, boosting the US dollar.
Investors eye Federal Reserve, New Zealand GDP
The New Zealand dollar has started the week quietly, but traders can expect some volatility on Wednesday. New Zealand releases GDP for Q4, one of the last countries to release this indicator. After sharp swings in GDP due to Covid-19 in the previous two quarters, the upcoming release is projected at 0.2%, which would indicate almost no economic growth in the fourth quarter. Despite this, it’s hard to argue with the fact that New Zealand has done an enviable job managing the Covid pandemic. Analysts expect growth to be muted in 2021, but the economy should pick up in 2022.
The Federal Reserve holds its policy meeting on Wednesday, and the message to the market is expected to be dovish, given that the Fed has said it does not anticipate raising rates before 2023. Investors will be particularly interested in the Fed’s dot-plot, which is a signal of the Fed’s expectations of future interest rate changes.
- There is resistance at 0.7244, followed by resistance at 0.7311
- The first level of support is 0.7106 protecting the round number of 0.7100. Below, we have support at 0.7035
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