NZD/USD bounce from 0.6950 ahead of RBNZ and post-US data
- New Zealand Dollar gets a boost ahead of the Reserve Bank of New Zealand (RBNZ) monetary policy meeting.
- Producer Price Index (PPI) ex Food & Energy year-on-year to April came below expectations at 2.3% against 2.4% expected by analysts.
The NZD/USD is trading at around 0.6990 up 0.26% on Wednesday, correcting some of its previous loses as the US Dollar retreats from highs with the US withdrawing from the nuclear deal with Iran and the geopolitical risk increased.
Freshly released the Producer Price Index (PPI) ex Food & Energy year-on-year to April came below expectations at 2.3% against 2.4% expected by analysts and the worse-than-expected US data allow NZD/USD to continue its intraday uptrend. It is important to note that market participants are focused on the Reserve Bank of New Zealand (RBNZ) Monetary Policy Statement (MPS) and Overnight Cash Rate (OCR) decision scheduled at 21:00 GMT.
The kiwi is having a 40-pip bounce from the 0.6950 level ahead of the RBNZ which is widely expected to leave the Overnight Cash Rate (OCR) in its monetary policy meeting unchanged. It is worth mentioning that it is the first policy statement under the new governor Adrian Orr and some changes in monetary policy and in wording can be expected. Commodity prices and the exchange rate evolution can increase inflation in the near term and give a momentary boost to NZD, according to analysts.
Meanwhile, the US Dollar Index, which measures the buck relative to a basket of currencies is trading down on Wednesday below the psychological 93.00 mark as investors are taking some profits as US President Trump withdrew the US from the Iran nuclear deal. The decision can lead to more geopolitical risks although US stock market indices remain pretty upbeat on Wednesday.
NZD/USD Technical levels
“To the upside, resistances are aligned at 0.6984 (daily pivot), 0.7000 (round number/ 5-DMA) and 0.7015 (10-DMA/ classic R1). Meanwhile, the downside remains cushioned by 0.6954 (5-month lows), below which floors open for a test of 0.6908 (classic S2/ Fib S3) and 0.6850 (psychological levels).” according to FXStreet analysts.