Forex News

04:03:37 27-09-2022

NZD/USD bounces off 2.5-year low towards 0.5700 on RBNZ’s Orr, NZ FinMin’s comments

  • NZD/USD picks up bids to refresh intraday high, snaps two-day downtrend near the multi-month low.
  • RBNZ’s Orr signals little bit more to do, NZ FinMin sees gradually easing inflation.
  • A pause in the risk-off mood also favor corrective pullback amid a quiet session.
  • US data, risk catalysts will be crucial for fresh impulse as buyers are far from taking control.

NZD/USD consolidates recent losses around the lowest level since March 2020, up 0.75% intraday near 0.5680, as it snaps a two-day downside during Tuesday’s Asian session.

The quote’s latest rebound could be linked to the light calendar, as well as comments made by Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr and New Zealand's Finance Minister (FinMin) Grant Robertson.

Earlier in the day, RBNZ’s Orr said that the central bank still had some work to do but the tightening cycle was already very mature. After him, "The global economy is a tough place to be at the moment. There are still issues coming out of Europe, obviously, with the war in Ukraine, issues in China," NZ FinMin Robertson said in an interview on state-owned TVNZ, per Reuters.

Also helping the NZD/USD buyers could be the recently softer US data and inflation expectations that raised questions on the hawkish Fedspeak.

That said, Chicago Fed National Activity Index weakened to 0.0 in August versus 0.09 market expectations and an upwardly revised prior reading of 0.29. Further, the US inflation expectations as per the 10-year and 5-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data, signaled that the gauges refreshed the multi-day low on Monday. While noting the details, the longer-term inflation expectations dropped to the lowest level since July 13, 2022, whereas the 5-year benchmark slumped to the lowest levels since June 2021 with the latest figures being 2.32% and 2.33% respectively.

With this, US Treasury yields retreat from the multi-year high while the S&P 500 Futures also print mild gains by the press time.

However, the market’s anxiety remains intact amid fears of multiple central banks’ actions to tame the heavy slump of respective currencies like the GBP/USD.

Also important will be US CB Consumer Confidence for September and Durable Goods Orders for August.

Also read: US Consumer Confidence Preview: Near-term relief or more risk aversion?

Technical analysis

Although oversold RSI triggered the NZD/USD pair’s rebound, the support-turned-resistance line from May 12, around 0.5900 by the press time, holds the key to the buyer’s conviction.


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