- NZD/USD pares intraday losses around the lows following mixed data from China.
- China Q2 GDP eased on YoY but rose more than expected on QoQ, monthly Retail Sales, IP figures also improved.
- DXY benefits from risk-off mood, exerts additional downside pressure on kiwi prices.
- Hawkish RBNZ tests sellers, covid updates, reflation woes will be the key to follow.
NZD/USD remains pressured around 0.7013, down 0.27% on a day, amid early Thursday. In doing so, the Kiwi pair consolidates the previous day’s gains, the biggest in three months, as the market’s sluggish sentiment battle mostly firmer data from the key customer China.
China’s second-quarter (Q2) GDP growth rose past 1.2% forecast to 1.3% QoQ but eased below 8.1% YoY expectations to 7.9%. Further, Retail Sales and Industrial Production (IP) for June rose more than 7.8% and 11.0% YoY forecasts to 8.3% and 12.1% in that order.
Read: China’s GDP expands 7.9% YoY in Q2 2021 vs. 8.1% expected, AUD/USD in lows
In addition to the mixed data, downbeat sentiment put a safe-haven bid under the US dollar and pressure the NZD/USD prices.
The worsening coronavirus (COVID-19) conditions at the largest trading partner Australia and elsewhere in Asia–Pacific, coupled with the fears of the extended pandemic, weigh on the risk appetite. Recently, World Bank Group President David Malpass said, per Reuters, “Vaccine shortages mean many countries in East Asia and Pacific may not fully vaccinate population until 2024 even as new variants emerge.”
It should, however, be noted that the previous day’s hawkish tilt by the Reserve Bank of New Zealand’s (RBNZ), as well as the market’s lack of belief in Fed Chair Jerome Powell’s bearish statements defending easy money, seem to test the NZD/USD sellers by the press time.
That said, S&P 500 Futures print 0.15% intraday loss whereas the US 10-year Treasury yields drop two basis points (bps) to 1.33% by the press time. Further, the US dollar index (DXY) consolidates the previous day’s losses around 92.40, up 0.05%.
Moving on, the second round of Powell’s testimony and second-tier US data, namely the Philadelphia Fed Manufacturing Index and weekly Jobless Claims, will decorate the calendar ahead of Friday’s key New Zealand inflation data. Meanwhile, the covid headlines and reflation chatters may entertain the NZD/USD bears. It’s worth noting that a strong CPI will affirm the RBNZ’s bullish bias and can recall the buyers who ruled on Wednesday.
Technical analysis
Failures to offer a decisive break of the 200-day EMA, coupled with the RSI divergence, keep NZD/USD sellers hopeful to revisit the 0.6920 key support zone, comprising the yearly bottom.