NZD/USD remains confined in a familiar multi-day-old trading band, around mid-0.6000s

• NZD/USD trades with a mild positive bias for the second straight day on Friday.
• The better-than-expected NZ Retail Sales data lend some support to the major.
• A modest USD uptick caps gains as traders look to the US PMIs for some impetus.

The NZD/USD pair edges higher for the second successive day on Friday, albeit lacks bullish conviction and remains below its highest level since August 10 touched earlier this week. Spot prices currently trade around mid-0.6000s, up just over 0.10% for the day, and seem poised to register gains for the second week in a row.

The New Zealand Dollar (NZD) draws support from the better-than-expected release of domestic Retail Sales figures, which displayed unexpected stability and remained flat during the third quarter of 2023. Market participants were anticipating a 0.8% decline in the headline figure. Adding to this, sales excluding automobiles and transport also defied consensus estimates of a 1.5% fall and rose 1% during the reported period. This, in turn, acts as a tailwind for the NZD/USD pair, though a modest US Dollar (USD) uptick caps the upside.

Investors seem convinced that the Federal Reserve (Fed) is done with its policy-tightening campaign and are now pricing in the possibility of a rate cut by May 2024. That said, the hawkish FOMC minutes released on Tuesday, along with Wednesday's upbeat US labor market and consumer sentiment data, hold back bears from placing fresh bets around the USD and acting as a headwind for the NZD/USD pair. Moreover, spot prices remain confined in a four-day-old broader trading range, further warranting caution for bullish traders.

Market participants also seem reluctant to position for a firm intraday direction and prefer to wait on the sidelines ahead of the Reserve Bank of New Zealand (RBNZ) policy meeting next week. In the meantime, the release of the flash US PMI prints for short-term trading impetus later during the early North American session on the last day of the week.

Technical levels to watch