Published on Jun 14, 2023

Daily Analysis For NZD/USD 14-06-2023

NZD/USD Analysis

Key Points: -

· On Tuesday, the NZD/USD pair regained positive momentum and rose to its highest level in nearly three weeks. Several factors contributed to the weakness of the US Dollar and supported the upward movement of the pair.

· Traders are currently focusing on the release of the US Consumer Price Index (CPI) for fresh market direction before the upcoming Federal Open Market Committee (FOMC) meeting on Wednesday.

· The CPI data will provide important insights into inflation in the United States, which can have a significant impact on the future monetary policy decisions of the Federal Reserve.

Today's Scenario: -

NZD/USD pair experienced buying interest near the 0.6100 level and continued to rise during the first half of the European session, reaching a nearly three-week high around 0.6155. This upward movement was supported by renewed selling pressure on the US Dollar (USD).

The decline in the USD can be attributed to expectations that the Federal Reserve (Fed) will refrain from raising interest rates in June. Recent dovish comments from several FOMC members have increased speculation of a pause in the Fed's tightening cycle. As a result, US Treasury bond yields have dropped, putting downward pressure on the USD and providing a tailwind for the NZD/USD pair.

Additionally, the positive sentiment in equity markets has contributed to the weakness of the safe-haven USD, benefiting the risk-sensitive New Zealand Dollar (Kiwi). However, concerns about a global economic slowdown, particularly in China, may limit the optimism. Furthermore, surprise rate hikes by other major central banks, such as the Reserve Bank of Australia (RBA) and the Bank of Canada (BoC), have indicated that the fight against inflation is ongoing. This has led to speculations about another rate hike by the Fed in July.

The Reserve Bank of New Zealand (RBNZ) has signaled that it has completed its aggressive hiking cycle, which began in 1999. This, combined with the uncertainty surrounding the upcoming US consumer inflation figures, may deter bullish bets on the NZD/USD pair. Investors are likely to adopt a cautious approach and await the release of the US CPI report, which will have an impact on the Fed's next policy decision. The outcome of the two-day monetary policy meeting is scheduled to be announced on Wednesday and is highly anticipated by market participants.

Diagram of NZD/USD: -

Economic Events: -

Date Event Impact Currency

02:00 (United States) API Crude Oil Stock Change Medium USD

04:15 (New Zealand) Current Account Medium NZD

05:30 (New Zealand) Food Inflation YoY Low NZD

10:00 (Netherlands) Balance of Trade Low EUR

10:30 (Finland) Inflation Rate YoY Low EUR

10:30 (Finland) Inflation Rate MoM Low EUR

10:30 (Finland) CPI Low EUR

11:30 (United Kingdom) GDP 3-Month Avg Medium GBP

11:30 (United Kingdom) Goods Trade Balance Non-EU High GBP

11:30 (United Kingdom) Balance of Trade Low GBP

11:30 (United Kingdom) Construction Output YoY Low GBP

11:30 (United Kingdom) Industrial Production YoY Low GBP

11:30 (United Kingdom) Industrial Production MoM Medium GBP

11:30 (United Kingdom) Manufacturing Production YoY Low GBP

11:30 (United Kingdom) Manufacturing Production MoM Medium GBP

11:30 (United Kingdom) Goods Trade Balance High GBP

11:30 (United Kingdom) GDP YoY Low GBP

11:30 (United Kingdom) GDP MoM High GBP

11:30 (Germany) Wholesale Prices MoM Medium EUR

11:30 (Germany) Wholesale Prices YoY Medium EUR

12:30 (China) FDI (YTD) YoY Medium CNY

12:30 (Slovakia) Inflation Rate MoM Low EUR

12:30 (Slovakia) Inflation Rate YoY Low EUR

12:30 (Slovakia) Core Inflation Rate MoM Low EUR

12:30 (Slovakia) Core Inflation Rate YoY Low EUR

12:30 (Slovakia) CPI Low EUR

13:30 (France) IEA Oil Market Report Medium EUR

14:30 (Euro Area) Industrial Production MoM Medium EUR

14:30 (Euro Area) Industrial Production YoY Low EUR

14:30 (Montenegro) GDP Growth Rate YoY Low EUR

15:00 (Germany) 10-Year Bund Auction Medium EUR

15:30 (Portugal) Inflation Rate MoM Low EUR

15:30 (Portugal) Inflation Rate YoY Low EUR

15:30 (Portugal) CPI Low EUR

15:30 (Ireland) Residential Property Prices YoY Low EUR

15:30 (Ireland) Residential Property Prices MoM Low EUR

16:30 (United States) MBA 30-Year Mortgage Rate Medium USD

16:30 (United States) MBA Mortgage Applications Low USD

16:30 (United States) MBA Mortgage Refinance Index Low USD

16:30 (United States) MBA Mortgage Market Index Low USD

16:30 (United States) MBA Purchase Index Low USD

17:00 (United Kingdom) NIESR Monthly GDP Tracker Low GBP

18:00 (Canada) New Motor Vehicle Sales Low CAD

18:00 (United States) Core PPI MoM Medium USD

18:00 (United States) Core PPI YoY Low USD

18:00 (United States) PPI YoY Low USD

18:00 (United States) PPI MoM High USD

20:00 (United States) EIA Heating Oil Stocks Change Low USD

20:00 (United States) EIA Refinery Crude Runs Change Low USD

20:00 (United States) EIA Crude Oil Stocks Change Medium USD

20:00 (United States) EIA Distillate Stocks Change Low USD

20:00 (United States) EIA Gasoline Production Change Low USD

20:00 (United States) EIA Crude Oil Imports Change Low USD

20:00 (United States) EIA Gasoline Stocks Change Medium USD

20:00 (United States) EIA Cushing Crude Oil Stocks Change Low USD

20:00 (United States) EIA Distillate Fuel Production Change Low USD

21:00 (United States) 17-Week Bill Auction Low USD

23:30 (United States) Fed Interest Rate Decision High USD

23:30 (United States) FOMC Economic Projections High USD

23:30 (United States) Interest Rate Projection - 1st Yr Medium USD

23:30 (United States) Interest Rate Projection - 2nd Yr Medium USD

23:30 (United States) Interest Rate Projection - Current Medium USD

23:30 (United States) Interest Rate Projection - Longer Medium USD

Buy Scenario: -

On the upside, the 200-SMA acts as an immediate resistance level near 0.6175. Beyond that, the 61.8% Fibonacci retracement level of the pair's downside move from May 19 to May 31, around 0.6185, will come into play, followed by the upper trend line of the mentioned channel near 0.6205, posing a challenge for the bulls. Till we do not advise to buy NZD/USD.

Sell Scenario: -

The failure to break above the 200-bar Simple Moving Average (SMA) and the overbought condition of the Relative Strength Index (RSI) (14) contribute to the pullback. However, there is still optimism among buyers due to the presence of an ascending trend channel that has been in place for a week.

The recent weakness in the pair could challenge the short-term bullish chart pattern, with the support level at 0.6130 in focus and further support expected around the 100-SMA at 0.6085. It's important to note that several levels marked since late May indicate that the buyers' last defense lies at 0.6030-25. Till we do not advise to sell NZD/USD.