- NZD/USD begins June on mixed footing after two-month uptrend.
- Bulls cheered US dollar weakness, ignored fears of NZ-China tussle, RBNZ’s Hawksby amid US/UK holidays.
- Increasing odds of downbeat RBA, a light calendar at home probe bulls.
NZD/USD retreats towards 0.7250 after Monday’s recovery moves, not to forget the last two months’ run-up, at the start of Tuesday’s Asian session. The kiwi pair wobbles around 0.7265-70 by the press time as Pacific traders brace for a busy day, mainly filled with the Aussie data/events.
Alike other G10 currencies, the New Zealand dollar (NZD) also benefited from the US dollar’s downbeat performance the previous day. The US dollar index (DXY) marked two consecutive months of declines, down 0.23% around 0.89.85, by the of May’s trading.
Although the off in the US and the UK markets restricted Monday’s moves, consolidation of reflation fears and the Federal Reserve’s (Fed) action, backed by Friday’s strong US CPI, weighed on the greenback. Also offering tailwind were chatters over US President Joe Biden’s infrastructure spending talks, which are extended to June, as well as the $6.0 trillion budget.
In doing so, market players ignored escalating tension over the NZ-China ties after Auckland backs Australia in its trade tussle with Beijing. Also on the negative side were comments from the RBNZ Assistant Governor Christian Hawkesby saying, “OCR projection of a rate hike at the end of next year is conditional.”
Amid these plays, US stock futures remained on the back foot and so do the German Bunds, portraying the downbeat sentiment in the market.
Moving on, NZD/USD traders should keep their eyes on the Aussie data/events amid a lack of major catalysts at home. The RBA meeting is among the key factors that may add to the kiwi pair’s sluggish performance if conveying the economic woes backed by the recent snap lockdown. It’s worth mentioning that the Aussie central bank isn’t expected to take any monetary policy actions during today’s meeting even as markets await clues of July action.
Read: Reserve Bank of Australia Preview: No fireworks as the focus is on July’s meeting
Other than the RBA, New Zealand’s Building Permits and PMI for Australia may also entertain NZD/USD traders but are less likely to offer any notable moves.
A rising wedge bearish chart formation, established in late March, keeps NZD/USD sellers hopeful unless crossing 0.7320 on a daily closing basis. However, 21-day SMA near 0.7230 restricts immediate declines ahead of the pattern’s support line around 0.7185.
