Nzdusd sees downturn amid mixed economic signals from the US and New Zealand’s positive economic outlook

NZDUSD Analysis

Performance after Thursday
Period	Pct	Chg	Momentum
Thursday	-0.49%	-29.1 Pips
Week to-date	-0.84%	-50 Pips
May	-0.41%	-24.6 Pips

Upcoming key events (London Time)

Fri 01:30 PM USD Nonfarm Payroll Employment

What happened lately

In New Zealand, the economy presented a positive outlook with building consents for new dwellings increasing significantly by 9.6% in March, up from a modest 0.7% in February, as per Stats NZ. This suggests a robust construction sector, likely boosted by a demand for new housing and infrastructure. Additionally, consumer confidence in New Zealand saw an uplift, with the ANZ – Roy Morgan Consumer Confidence index climbing to 98.3 points in April from 93.2 points in March. This uptrend indicates that consumers are feeling more optimistic about their financial situation and the economy, which could spur household spending.

In contrast, the economic data from the United States depicted a mixed scenario. The U.S. Initial Unemployment Claims increased to 241,000 for the week ending 26 April, suggesting some weakening in the labor market. Meanwhile, the Personal Consumption Expenditures (PCE) Price Index excluding food and energy saw a reduction to 2.6% annually in March, down from 2.8% in February, signifying a tempering in inflationary pressure. U.S. Personal Income growth for March also saw a downturn to 0.5% from a revised 0.7% in February, though consumer spending picked up to 0.7% in March from 0.4% in February, indicating that while incomes are subdued, consumer expenditures remain resilient. On the housing front, Pending Home Sales saw a notable increase to 6.1% in March, reflecting a rebound in the real estate market.

The U.S. GDP figures for Q1 showed a contraction at an annual rate of -0.3%, a sharp drop from 2.4% growth in Q4, highlighting economic headwinds. Furthermore, the Chicago Purchasing Managers’ Index fell to 44.6 points in April, indicating a contraction in business activity, while the quarterly Employment Cost Index remained static at 0.9%. The mixed inflation metrics, with the PCE Price Index (3-month) and GDP Price Index both increasing, paint a picture of inflationary risks still present.

Given this backdrop, the NZDUSD downtrend seen on Thursday, where it dropped by 0.49% to 0.59045, could be a reflection of profit-taking amidst mixed economic signals from the U.S. The positive New Zealand economic data may support the kiwi dollar, yet the impending high-impact U.S. Nonfarm Payroll Employment report could further influence the pair’s direction. A stronger-than-expected payroll number might strengthen the USD, exerting additional pressure on the NZDUSD pair, while a weaker outcome could provide some relief to kiwi bulls.

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What can we expect from NZDUSD today?

NZDUSD on Thursday dropped -0.49% to 0.59045. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for NZDUSD looks mixed as the pair is likely to consolidate above 0.58815 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 0.59510 or trades above daily pivot 0.59163. Break above could target R1 at 0.59392. While to the downside, we are looking at 0.58815 (S1) and daily low of 0.58933 as support levels. NZDUSD need to break on either side to indicate a short-term bias. A close below 0.58933 would indicate selling pressure.

For the week to-date, take note that NZDUSD is bearish as the pair posted lower by -0.84%.

Key levels to watch out:

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