- NZD/USD struggles to extend the bounce off 25-month low after NZ data.
- New Zealand’s Q1 Current Account – GDP Ratio widened, Current Account deficit increased.
- Risk-off mood exerts additional downside pressure on the Antipodeans.
- China’s Industrial Production, Retail Sales may entertain traders ahead of FOMC.
NZD/USD fades bounce off a two-year low as it flirts with 0.6220-25 during Wednesday’s initial Asian session. The Kiwi pair’s latest inability to rebound could be linked to the downbeat New Zealand (NZ) data, as well as the market fears ahead of the Federal Open Market Committee (FOMC).
NZ Current Account – GDP Ratio dropped to -6.5% versus -6.3% expected and -5.8% prior. Further, the Current Account balance also depleted to $-6.143B compared to $-5.5B market forecasts and $-7.26B previous readings.
On the other hand, the US Producer Price Index (PPI) matched 0.8% MoM forecasts for May, also easing to 10.8% YoY figures versus 10.9% expected and prior readouts. The PPI ex Food & Energy, known as Core PPI, dropped below 8.6% YoY forecasts to 8.3%.
While portraying the mood, the US stock futures remain sluggish around the lowest levels since early 2021 while the Treasury bond yields dribble at the 11-year top near 3.5%, around 3.475% at the latest.
It should be noted that chatters surrounding China’s worsening virus conditions and the Sino-American tussles over Taiwan join the fears of the Fed’s aggressive rate hike to exert additional downside pressure on the NZD/USD prices.
Moving on, China’s monthly prints of Industrial Production and Retail Sales for May could entertain NZD/USD traders due to Auckland’s trade ties with Beijing. However, major attention will be given to the Fed’s ability to tame inflation and not disappoint the markets as it walks on a tight rope.
Read: Fed Preview: Powell to plunge markets or raise yields, a win-win for the dollar, five scenarios
Technical analysis
The late 2019 low surrounding 0.6200 precedes April 2020 peak near 0.6175 to restrict short-term NZD/USD downside amid oversold RSI conditions. The recovery moves, however, remain elusive until the quote crosses the immediate 0.6300 hurdle.