New Zealand slips, Business Confidence next

The New Zealand dollar is in negative territory on Wednesday. In the North American session, NZD/USD is trading at 0.7194, down 0.45% on the day. New Zealand will release Manufacturing Sales for Q1 (22:45 GMT). The indicator showed a small gain of 0.5% in the fourth quarter.

Will ANZ Business Confidence continue to climb?

The ANZ Business Confidence Index jumped 7.0 points in May, after a decline of -8.4 a month earlier. With global economic conditions improving, the export-reliant economy should gather steam in the second half of 2021. Another strong release from ANZ Business Confidence on Wednesday (1:00 GMT) could give the New Zealand dollar a lift.

As Covid rates fall, major economies have been reopening, and improving economic conditions have led to speculation that central banks may respond by tightening policy.  the Reserve Bank of New Zealand surprised the markets last week when it signalled the potential of a rate hike in the second half of 2022. If the RBNZ continues to send a hawkish message to the markets, we can expect the New Zealand dollar to gain ground.

This week’s key event could well be Thursday’s CPI print. In April, US inflation surged to a 13-year high, shaking up the financial markets. The jump in inflation caused speculation that the Fed might consider a taper of its massive stimulus program. Last week’s nonfarm payroll report, which was weaker than expected, has eased some of the pressure on the Fed to tighten monetary policy. The reading of 559 thousand was a solid gain, but fell short of the consensus of 650 thousand. The Fed has insisted that inflation is transient, but the markets aren’t completely in agreement with the Fed’s stance, and if the upcoming CPI release is higher than expected, the Fed will be forced once again to defend its dovish monetary policy.

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NZD/USD Technical

 

  • There is resistance at 0.7777 and 0.7846
  • On the downside, we have support at 0.7658 and 0.7608

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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