- NZD / USD bulls pause after four day uptrend.
- Westpac’s quarterly job confidence index jumped to 103.90, New Zealand trade balance
- Risk appetite decreases Fed’s removal bank restrictions are combating the passage of Biden’s stimulus.
- Second tier US data will join covid, China and Fedspeak to keep markets active.
NZD / USD hovered around the week’s high, having recently fallen to 0.7060, amid a sluggish Asian session on Friday. While bullish market sentiment favored the Antipodes earlier, recently mixed catalysts have kept the Kiwi pair from continuing to advance in recent times.
Among them, the contrasting trade balance figures for New Zealand (NZ) on a monthly and annual basis join recent challenges to the previous risky mood. Despite this, bullish New Zealand jobs signals are keeping buyers bullish.
New Zealand’s trade balance for May fell to NZD -0.062 billion from + $ 0.764 billion year-on-year, but the monthly result improved from NZD 414 million to NZD 469 million. In addition, exports increased from NZD 5.40 billion to NZD 5.86 billion while imports jumped from NZD 4.986 billion to NZD 4.398 billion.
In addition, Westpac’s quarterly details of New Zealand’s Job Confidence Index rose 4.4 points to 103.9. The bank also mentions: “New Zealanders’ confidence in labor market conditions has returned to roughly what it was before the intervention of Covid-19. The most notable result of the June survey was a sharp increase in perceptions of current employment opportunities, which are now above the pre-covid level. “
Elsewhere, market sentiment is weakening after the initial positive reaction to US President Joe Biden’s shift in infrastructure spending and weaker data, easing pressure on Fed policymakers. The latest cautious mood could be linked to the Fed removing stock and dividend limits on major US banks after successfully passing recent stress tests.
Against this backdrop, the S&P 500 Futures is struggling to extend the latest rally beyond record highs as US Treasuries yields remain subdued at press time.
Given the lack of major data / events to release ahead of the US session, NZD / USD traders could see a consolidation of recent gains if market sentiment deteriorates further. For this, the headlines relating to China and covid can play their part.
Daily close beyond the 200-day SMA level of 0.7050 allows NZD / USD to aim for January-March lows near the 0.7100 threshold, but several hurdles beyond the same test are testing the bulls of the Kiwi pair.