Market sentiment is skewed by fears of a Russian invasion of Ukraine, but Fedspeak might be a positive option.
RBNZ’s Orr justifies recent risers and signals above neutral rates by the time of 2023
The US calendar is a densely populated one. This will attract traders. Risk catalysts are key.
NZD/USD, like other antipodeans also shows the market’s negative sentiment by snapping an uptrend of seven days with 0.30% intraday loss during Thursday’s Asian session. However, the market recently rebounded from the intraday low of 0.6750 at the press time.
NZD/USD bears rejoice the increasing fears around the Russia-Ukraine conflict as Kyiv, the West and more military personnel from Moscow are signaled near the border. Ukraine declared an emergency in response to the threat of a geopolitical conflict with Russia. Tense market conditions are also evident in comments made by Antony Blinken (US Secretary of State), who believes Russia will invade Ukraine within the next 24 hours.
The US dollar is also supported by the positive comments of San Fransisco Fed President Mary Daly, in addition to geopolitical risks. In her most recent speech, the policymaker mentioned’more urgency’ regarding rate hikes.
According to Reuters, Adrian Orr, Governor of the RBNZ, stated Wednesday that the official cash rates (OCRs) would be higher than neutral by next year. RBNZ Chief Adrian Orr blamed inflation for recent hawkish actions.
Wall Street was unable to portray the mood and saw losses. The S&P 500 Futures fell 0.85% intraday. The yields on the US 10-year Treasury fell 1.5 basis points (bps), to 1.96% at press time. The safe-haven appeal of the US Dollar Index increases 0.12% intraday
The key catalysts for NZD/USD traders in the future will be Russia-Ukraine headlines, and Fedspeak. The second reading of the US Q4 GDP, which is expected to be 7.0% annually versus 6.9% in the prior year, and the US New Home Sales figures for January as well as Personal Consumption Expenditure details (Q4) will be important.
Analyse technique
NZD/USD made a U-turn at 0.6810 but it still maintains the early-week breakouts of the 50 DMA and a trend line that descends from October 2021 (each around 0.67360 and 0.6715). The pair buyers might remain optimistic until they see a clear downside breakout of 0.6715.
