NZD/USD struggles to defend the corrective pullback from a fortnight low during Thursday’s Asian session. That said, the Kiwi pair takes rounds to 0.6220 as traders await key data from China and the US, while also showing no major reaction to comments from Reserve Bank of New Zealand (RBNZ) policymaker.
RBNZ Chief Economist Paul Conway defends the New Zealand (NZ) central bank’s hawkish monetary policy as he said, “Policy tightening will likely see actual house prices move back towards sustainable levels more in line with market fundamentals.”
However, RBNZ’s Conway couldn’t impress momentum traders amid the market’s cautious mood ahead of top-tier data from China and the US.
That said, the Kiwi pair dropped to a fortnight low during a three-day downtrend the previous day as Fed Chair Jerome Powell’s hawkish comments propelled the risk-off mood and the US dollar. Fed Chairman Jerome Powell mostly repeated his latest pledge to battle inflation with readiness to announce another 0.75% rate hike if needed. The Fed Boss also praised the US economic strength and helped the US dollar to remain firmer.
It should be noted that the final readings of the Q1 US Gross Domestic Product Annualized dropped to -1.6% versus the initial forecasts of -1.5%. The Personal Consumption Expenditure (PCE) Prices, on the other hand, rose more than 7.0% expected and prior readings to 7.1% during the stated period.
Against this backdrop, Wall Street closed mixed and the US Treasury yields dropped for the second day. It’s worth noting that the S&P 500 Futures remain downbeat and the US bond coupons also stay pressured by the press time.
Having failed to react to RBNZ’s Conway, NZD/USD traders await China’s NBS Manufacturing PMI and Non-Manufacturing PMI for June amid fears of recession. Forecasts suggest the headline NBS Manufacturing PMI rise to 50.5 from 49.6 whereas the Non-Manufacturing PMI could also jump to 52.5 versus 47.8 prior. Additionally, the Fed’s preferred version of inflation, namely the Core Personal Consumption Expenditure (PCE) Price Index, for May, expected to rise to 0.4% from 0.3% MoM, will also be important to watch for clear directions.
Although a seven-week-old horizontal support area surrounding 0.6215-20 restricts the immediate downside of the NZD/USD, the pair buyers remain skeptical unless witnessing a clear break of the monthly resistance line, near 0.6280 by the press time.
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