Nzdusd rises as New Zealand business confidence soars and US economic data sends mixed signals

NZDUSD Analysis

Performance after Wednesday
Period	Pct	Chg	Momentum
Wednesday	0.18%	10.1 Pips
Week to-date	0.89%	49.4 Pips
January	-0.45%	-25.5 Pips

Upcoming key events (London Time)

Thu 01:30 PM USD Monthly Retail Trade (1-mth)

What happened lately

The economic data from the United States shows mixed results for December. The Consumer Price Index (CPI) inflation rate experienced a slight increase to 0.4% from 0.3% the previous month. However, when excluding the food and energy sectors, it decreased to 0.2% from 0.3%. Over a 12-month period, the CPI excluding these volatile sectors dropped marginally to 3.2% from 3.3%, while the overall 12-month CPI rose to 2.9% from 2.7%. The U.S. Producer Price Index (PPI) followed a similar trend, with the monthly index declining to 0.2% from 0.4%. Nonetheless, the annual PPI excluding food and energy marked a slight growth to 3.5% from 3.4%. Additionally, the U.S. Monthly Treasury Budget Statement showed a significant improvement, narrowing down to -$87 billion from -$367 billion in November.

In New Zealand, the NZIER Business Confidence index saw a dramatic increase in the fourth quarter, rising to 16% from -1% in the previous quarter. This substantial improvement suggests increased optimism in the New Zealand business community about the future economic conditions.

These economic indicators present implications for the NZDUSD exchange rate. The improvement in New Zealand’s business confidence suggests a strengthening of the New Zealand Dollar (NZD) as businesses remain positive about economic performance. Conversely, the mixed signals from U.S. inflation and producer prices, alongside improved fiscal positioning, do not provide a clear direction for the U.S. Dollar (USD). The rise in inflationary pressures could suggest tightening monetary policy in the U.S., potentially strengthening the USD. However, improved fiscal conditions along with slow momentum in core prices might mitigate substantial strengthening. This complex interplay led the NZDUSD pair to rise slightly by 0.18% on Wednesday to 0.56142. Upcoming U.S. retail trade data could further influence this currency pair, with high impact news as markets seek cues on consumer spending and economic momentum in the U.S. In balance, stronger New Zealand data against a backdrop of mixed U.S. economic signals could sustain an NZD advantage in the near term, assuming stable external conditions.

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What can we expect from NZDUSD today?

NZDUSD on Wednesday rose 0.18% to 0.56142. Price is above 9-Day EMA while Stochastic is rising.

Updated daily direction for NZDUSD looks bullish as the pair ended higher after Wednesday trading session.

Looking ahead for the day, immediate upside resistance level is R1 at 0.56447 with break above could target R2 at 0.56751 or figure level area. While towards the downside, we are looking at daily low of 0.55958 as an important support. Break below this level could weaken the current bullish momentum. A break above 0.56507 may suggest continuation after recent positive movement.

For the week to-date, take note that NZDUSD is mixed as compared to the prior week.

Key levels to watch out:

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