NZD/USD Trades in a Narrow Range As Business Confidence Drops

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NZD/USD- The economic data from New Zealand was lackluster. Manufacturing sales increased by 0.4 percent in the first quarter of 2020, following a 0.4 percent increase in the fourth quarter of 2020. The preliminary ANZ business Confidence Index for June showed a 2 point drop in business confidence to -0.4 percent. Nonetheless, the indicator suggested that business conditions in the first half of 2021 remained stable.

Inflation forecasts are at their highest level since November 2017, at 2.3 percent. We’ve seen how rising inflationary pressures in the US have become a prominent subject for the markets, and the RBNZ is no doubt keeping a careful eye on this reading, as inflation expectations can lead to actual inflation numbers. The RBNZ’s inflation objective is a range of 1% to 3%, thus the 2.3 percent rate is higher than the objective’s midpoint.

Temporary supply problems are partly to blame for the rise in inflation. Even so, if inflation data continues to trend upward, the RBNZ, like the Fed, will be pressed to tighten policy.

In the absence of high-tier data releases and fundamental developments, the US Dollar Index (DXY) continues to oscillate within its weekly range. The DXY is currently trading at 89.98, down 0.16 percent on the day, allowing the NZD/USD to maintain its small daily gains for the time being.

New Zealand Dollar (NZD/USD) Rebounds off Demand Zone

The NZD/USD is gaining ground as risk appetite improves across the board. On the daily chart, the pair has found strong bids in the demand area (0.7120). The subsequent breakout over 0.7230 indicates that there is a lot of interest in buying. The crucial support level is 0.7140, which must be maintained for the bullish trend to continue.

The RSI has returned to neutral territory, allowing for a new wave of rallying. The next goal on the upside would be 0.7285, a significant resistance level. The highway could open up towards 0.7400 if it is breached.

Manufacturing sales in New Zealand increased by 0.4 percent in the first quarter, according to figures released earlier in the day. Furthermore, the ANZ Business Confidence Index fell to -0.4 in June from 1.8 in May, but the Activity Outlook Index rose to 29.1% from 27.1 percent in the same time. Nonetheless, these conflicting results had no discernible impact on the NZD’s market value.