NZD/USD bulls have stepped in trying to correct with eyes on 0.62s
- NZD/USD bulls in the market eyeing continued correction.
- Still bearish while below weekly trendline resistance.
NZD/USD has been trying to make its way higher on Thursday and is up by some 0.5% into the close in the New York FX session. The pair traveled from a low of 0.6114 to a high of 0.6161 on the day in what was choppy trading.
´´The Kiwi is a touch higher this morning after a whippy night that saw it recover, then slide, then bounce through mixed US data, and a rebound in equities and commodities,´´ analysts at ANZ Bank explained.
´´Yesterday’s comments by the PM suggesting we’re in for a no-frills Budget, with the estimated $9-14.5bn cyclone rebuild costs met by a mix of savings, reprioritization, and debt may have cooled the nerves of those worried about a debt blowout,´´ the analysts said. ´´But the current account deficit remains a key concern, and may weigh on NZD sentiment for some time.´´
´´AUD price action has been a key driver (by correlation) for the Kiwi, and on that score, we are mindful of the RBA decision next week. We expect a pause, but if we are surprised, it’ll only be one way, and that’s a hike (which could boost the AUD),´´ their note concluded.
Meanwhile, the Reserve Bank of New Zealand is around the corner. The analysts at ANZ Bank said that they forecast a follow-up 25bp OCR hike at the May MPS, taking the OCR to 5.5%, ´´which appears to be the Committee’s ‘happy place’, where they can ‘watch, worry and wait’.´´
In US data, economic growth in the first quarter of this year was weaker than what markets had been built up to expect. The advance estimate of Q1 Gross Domestic Product increased just 1.1%, well below the 1.9% forecast.
NZD/USD technical analysis
NZD/USD is on the front side of the downtrend still and submerged below horizontal resistance as well as per the weekly chart above.
The 38.2% Fibonacci comes in near 0.6215 for the bulls to target.