Published on Jun 15, 2023

Daily Analysis For NZD/USD 15-06-2023

NZD/USD Analysis

Key Points: -

· The NZD/USD pair continues to decline from its multi-week high as it faces pressure from various factors.

· The Kiwi is particularly impacted by a technical recession in New Zealand and weaker macroeconomic data from China.

· Additionally, the Federal Reserve's indication of further interest rate increases supports the US Dollar and adds to the downward slide of NZD/USD.

Today's Scenario: -

The NZD/USD pair is experiencing significant selling pressure in the Asian session on Thursday, extending its retreat from a three-week high reached around the 0.6235 level the previous day. The pair maintains its bearish tone following the release of mostly disappointing macroeconomic data from China. Currently trading around the 0.6165-0.6170 region, the pair is down more than 0.60% for the day.

The latest data from China's National Bureau of Statistics (NBS) reveals that Retail Sales in May grew by 12.7% YoY, falling short of the anticipated 13.6% growth and the previous month's 18.4% increase. Additionally, China's Industrial Production for the same period came in at 3.5% YoY, lower than the estimated 3.6% and the previous reading of 5.6%. Furthermore, Fixed Asset Investment in May increased by 4.0% YTD YoY, missing the expected 4.4% and down from the previous 4.7%. These figures raise concerns about slowing economic growth in the world's largest economy and weigh on currencies such as the Kiwi.

The New Zealand Dollar (NZD) is further undermined by disappointing domestic data, indicating a contraction of 0.1% in the first quarter and pushing the economy into a technical recession. The Reserve Bank of New Zealand (RBNZ) has also signaled that it has concluded its most aggressive hiking cycle since 1999, contributing to aggressive selling pressure on the NZD/USD pair. Additionally, the modest strength of the US Dollar (USD) is another factor that adds to the bearish sentiment surrounding the major currency pair.

The USD Index (DXY), which measures the performance of the US Dollar against a basket of currencies, has rebounded from a one-month low following the Federal Reserve's (Fed) hawkish outlook and its intention to resume the rate-hiking cycle. The Fed has indicated that borrowing costs will likely increase by another 50 basis points by the end of December. Market participants have swiftly adjusted their expectations, now pricing in a higher probability of a 25 basis point rate hike in July. This supports the US Dollar and puts pressure on the NZD/USD pair.

Given the fundamental backdrop, the bias appears to favor bearish traders. From a technical standpoint, the failure near the significant 200-day Simple Moving Average (SMA) suggests that the path of least resistance for the NZD/USD pair is to the downside. Traders will now look to key US economic data, including monthly Retail Sales, Weekly Initial Jobless Claims, the Empire State Manufacturing Index, the Philly Fed Manufacturing Index, and Industrial Production figures, for fresh market direction during the early North American session.

Diagram of NZD/USD: -

Economic Events: -

Date Event Impact Currency

0:00 (United States) Fed Press Conference High USD

4:15 (New Zealand) GDP Growth Rate YoY Medium NZD

4:15 (New Zealand) GDP Growth Rate QoQ Medium NZD

5:20 (Japan) Foreign Bond Investment Low JPY

5:20 (Japan) Stock Investment by Foreigners Low JPY

5:20 (Japan) Machinery Orders YoY Medium JPY

5:20 (Japan) Machinery Orders MoM Medium JPY

5:20 (Japan) Imports YoY Low JPY

5:20 (Japan) Balance of Trade High JPY

5:20 (Japan) Exports YoY Medium JPY

5:30 (Euro Area) Eurogroup Meeting Medium EUR

7:00 (Australia) Consumer Inflation Expectations Low AUD

7:00 (Australia) Part Time Employment Chg Medium AUD

7:00 (Australia) Participation Rate Low AUD

7:00 (Australia) Full Time Employment Chg Medium AUD

7:00 (Australia) Unemployment Rate High AUD

7:00 (Australia) Employment Change High AUD

7:00 (Australia) RBA Bulletin Medium AUD

7:00 (China) PBoC 1-Year MLF Announcement Low CNY

7:00 (China) House Price Index YoY Medium CNY

7:30 (China) Unemployment Rate High CNY

7:30 (China) Retail Sales YoY High CNY

7:30 (China) Industrial Production YoY High CNY

7:30 (China) Fixed Asset Investment (YTD) YoY Medium CNY

9:05 (Japan) 3-Month Bill Auction Low JPY

10:00 (Japan) Tertiary Industry Index MoM Low JPY

10:00 (Netherlands) Unemployment Rate Medium EUR

10:30 (Finland) GDP YoY Low EUR

12:00 (Switzerland) Producer & Import Prices MoM Low CHF

12:00 (Switzerland) Producer & Import Prices YoY Low CHF

12:15 (France) Inflation Rate MoM Medium EUR

12:15 (France) Inflation Rate YoY Medium EUR

12:15 (France) Harmonised Inflation Rate MoM Low EUR

12:15 (France) Harmonised Inflation Rate YoY Low EUR

13:30 (Spain) Balance of Trade Medium EUR

14:10 (Spain) Obligacion Auction Low EUR

14:10 (Spain) Bonos Auction Low EUR

14:30 (Euro Area) Balance of Trade Medium EUR

14:30 (France) 5-Year OAT Auction Low EUR

14:30 (France) 3-Year OAT Auction Low EUR

14:30 (Greece) Construction Output YoY Low EUR

14:30 (Montenegro) Inflation Rate YoY Low EUR

14:30 (Montenegro) Harmonised Inflation Rate YoY Low EUR

14:30 (Montenegro) Inflation Rate MoM Low EUR

15:00 (Belgium) Construction Output YoY Low EUR

15:30 (France) 10-Year Index-Linked OAT Auction Low EUR

15:30 (Ireland) Balance of Trade Low EUR

16:00 (Portugal) Economic Activity YoY Low EUR

16:00 (Portugal) Private Consumption YoY Low EUR

17:45 (Canada) Housing Starts Medium CAD

17:45 (Euro Area) ECB Interest Rate Decision High EUR

17:45 (Euro Area) Marginal Lending Rate Low EUR

17:45 (Euro Area) Deposit Facility Rate High EUR

18:00 (Canada) Manufacturing Sales MoM Low CAD

18:00 (United States) Import Prices YoY Low USD

18:00 (United States) Export Prices YoY Low USD

18:00 (United States) Import Prices MoM Medium USD

18:00 (United States) Export Prices MoM Medium USD

18:00 (United States) NY Empire State Manufacturing Index Medium USD

18:00 (United States) Retail Sales YoY High USD

18:00 (United States) Retail Sales Ex Autos MoM High USD

18:00 (United States) Retail Sales MoM High USD

18:00 (United States) Philly Fed Business Conditions Low USD

18:00 (United States) Philly Fed Employment Low USD

18:00 (United States) Philly Fed CAPEX Index Low USD

18:00 (United States) Philly Fed Prices Paid Low USD

18:00 (United States) Philly Fed New Orders Low USD

18:00 (United States) Philadelphia Fed Manufacturing Index Medium USD

18:00 (United States) Jobless Claims 4-week Average High USD

18:00 (United States) Continuing Jobless Claims High USD

18:00 (United States) Initial Jobless Claims High USD

18:00 (United States) Retail Sales Ex Gas/Autos MoM High USD

18:15 (Euro Area) ECB Press Conference High EUR

18:30 (Belgium) Balance of Trade Low EUR

18:30 (Kosovo) GDP Growth Rate YoY Low EUR

18:45 (United States) Capacity Utilization Low USD

18:45 (United States) Manufacturing Production YoY Low USD

18:45 (United States) Industrial Production YoY Medium USD

18:45 (United States) Industrial Production MoM Medium USD

18:45 (United States) Manufacturing Production MoM Low USD

19:30 (United States) Business Inventories MoM Medium USD

19:30 (United States) Retail Inventories Ex Autos MoM Low USD

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

21:00 (United States) 8-Week Bill Auction Low USD

21:00 (United States) 4-Week Bill Auction Low USD

21:05 (United Kingdom) BoE Cunliffe Speech Low GBP

21:30 (Canada) 2-Year Bond Auction Low CAD

21:30 (United States) 15-Year Mortgage Rate Low USD

21:30 (United States) 30-Year Mortgage Rate Low USD

Buy Scenario: -

On the technical front, the NZD/USD pair has faced strong resistance near the 61.8% Fibonacci retracement level (drawn from the high of 0.6385 on May 11 to the low of 0.5985 on May 31) at 0.6230 on the four-hour chart. The downward-sloping trendline from the May 11 high at 0.6385 continues to act as support for Kiwi bulls. Additionally, the 20-period Exponential Moving Average (EMA) at 0.6161 is providing a cushion for Kiwi buyers.

The Relative Strength Index (RSI) (14) is currently within the bullish range of 60.0-80.0, indicating a positive bias for the Kiwi.

If the NZD/USD pair successfully breaks above the round-level resistance at 0.6200, it could move towards the high of May 17 at 0.6261, followed by the high of May 19 at 0.6306. Till we do not advise to buy NZD/USD.

Sell Scenario: -

On the downside, if the pair falls below the intraday low at 0.6015, it could reach a fresh six-month low towards the low of November 11, 2022, at 0.5984. Further downside movement could expose the pair to the high of November 2, 2022, at 0.5941. Till we do not advise to sell NZD/USD.