Nzdusd experiences dip as mixed economic data influences market sentiment

NZDUSD Analysis

Performance after Thursday
Period	Pct	Chg	Momentum
Thursday	-0.07%	-3.8 Pips
Week to-date	1.2%	69 Pips
March	3.85%	215.3 Pips

Upcoming key events (London Time)

No major events for the day.

What happened lately

In February, New Zealand experienced a positive shift in its trade dynamics. Exports rose to $6.74 billion from $6.19 billion in January, with earlier projections of $6.06 billion, marking a notable increase. Meanwhile, imports decreased to $6.23 billion from $6.68 billion in January, according to Stats NZ. This led to an improvement in the 12-month trade balance to -6.51 NZD from a previous figure of -7.34 NZD, revealing a healthier trade outlook. Additionally, New Zealand’s GDP for the fourth quarter increased to 0.7%, recovering from a revised contraction of -1.1% in the prior quarter. However, the annual GDP during this timeframe declined to -1.1% compared to -0.3% in the third quarter.

In the United States, new data from the Department of Labor show that initial unemployment claims for the week ending March 15 increased to 223K, a slight rise from earlier figures. Simultaneously, the U.S. Manufacturing Business Outlook decreased to 12.5 points in March, down from 18.1 in February, signaling weakening manufacturing sentiments as reported by the Philadelphia Fed. The Federal Reserve revealed its interest rate projections, showing a notable decrease to 3.9%, with forecasts for the first year dropping to 3.4%, and the second year to 3.1%. The long-term projection remains steady at 3%. Moreover, the Federal Funds Rate held constant at 4.5%, consistent with previous sessions.

The recent economic data from New Zealand signals short-term strength in the NZD due to improved trade balances and positive GDP growth for the fourth quarter. However, the annual GDP decline may temper longer-term enthusiasm. Conversely, U.S. economic indicators present a mixed bag, with rising unemployment claims, declining manufacturing outlook, and reduced future interest rate projections, suggesting potential economic slowdowns. This contrast may bolster the NZD when paired against the USD, which might be pressured by the reduced interest rate outlook. Yet, with Kiwi under 0.58140 USD as of Thursday, consolidative behavior for NZDUSD suggests a cautious market response. In summary, while New Zealand’s economic data has improved, the subdued GDP growth and global market conditions, coupled with the mixed U.S. data, contribute to cautious sentiment among traders leading to a consolidation in the NZDUSD pair.

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What can we expect from NZDUSD today?

NZDUSD on Thursday dropped -0.07% to 0.58140. Price is above 9-Day EMA while Stochastic is falling in overbought zone.

Updated daily direction for NZDUSD looks mixed as the pair is likely to consolidate above 0.58095 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 0.58254 or trades above daily pivot 0.58175. Break above could target R1 at 0.58219. While to the downside, we are looking at 0.58095 (S1) and daily low of 0.58130 as support levels. NZDUSD need to break on either side to indicate a short-term bias. A close below 0.58130 would indicate selling pressure.

For the week to-date, take note that NZDUSD is bullish as the pair continued to trade higher and is up by 1.2% over the past few days.

Key levels to watch out:

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