NZD/USD: Bulls ignore New Zealand CPI to keep 0.6600 on radars ahead of China GDP
- NZD/USD remains firm while extending pullback from 0.6564.
- New Zealand CPI matches 1.5% YoY, -0.5% QoQ forecasts in the second quarter.
- Vaccine-led optimism remains on the card, Sino-American tussle attacks the mood.
- The Aussie jobs report, Chinese GDP decorates the Asian economic calendar.
NZD/USD picks up the bids near 0.6578 during the early Asian session on Thursday. The pair recently shrugged off weaker than previous second-quarter (Q2) inflation figures from New Zealand to portray the second day of rise. The upbeat risk-tone sentiment, backed by hopes of the coronavirus (COVID-19) vaccine could be cited for the pair’s latest strength.
New Zealand’s Q2 Consumer Price Index (CPI) slipped below 2.5% prior on YoY to market forecasts of 1.5%. The headline inflation gauge also reversed +0.8% QoQ figures while matching -0.5% expected figures.
Read: NZ CPI arrives as expected, 1.5% YoY
NZD/USD prices refrained from respecting downbeat inflation data as markets already anticipated a weaker print and the Reserve Bank of New Zealand (RBNZ) seems in no mood to alter the monetary policy soon. Also likely to favor the strength of the pair is the news concerning the pandemic’s cure. Moderna’s announcements of upbeat clinical trial results follow US officials’ promises of an early cure to the pandemic. The mood recently got support from Oxford scientists.
However, escalating tension between the US and China questions the upbeat sentiment. After arguing over the South China Sea and shunning of Hong Kong’s special trading status, the world’s two largest economies suggest further hardships for tension. The latest signal in the story is the White House announcements of checks on apps, mainly Chinese, which question national security, which in turn got an expectedly bitter response from Beijing.
While portraying the recent market mood, S&P 500 Futures part ways from Wall Street’s upbeat performance. Though, the US 10-year Treasury yields remain mostly positive around 0.63%.
Although updates concerning the virus and Sino-American tension will be the key, headline economics from major customers will also be important for the NZD/USD pair traders. While anticipated strength in the data could offer further upside to the quote, risk reset might dim the bulls’ charm.
Technical analysis
The pair’s sustained trading above a two-month-old support line, currently around 0.6560, enables the bulls to target the monthly top near 0.6600.