NZD/USD forecast amid strong New Zealand economic data

on May 24, 2024
  • The RBNZ delivered a hawkish interest rate decision on Wednesday.
  • New Zealand published strong retail sales and trade numbers.
  • The Fed and RBNZ have hinted that they could hike rates again.

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The New Zealand dollar, popularly known as the kiwi, was in the spotlight this week as traders watched key events in the country. The NZD/USD pair was trading at 0.6097 on Friday, a few points below this week’s high of 0.6150.

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RBNZ and key economic data

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The NZD/USD pair was on the spotlight after the Reserve Bank of New Zealand (RBNZ) delivered a hawkish pause on Wednesday. It left interest rates unchanged at 5.50% and warned that it was prepared to hike rates if inflation remained at an elevated level. The governor also hinted that rates will stay higher for longer.

The pair also reacted to the stronger-than-expected retail sales numbers. According to the statistics agency, retail sales rose by 0.5% in the first quarter, beating the median estimate of a 0.3% decline. The volume of sales had dropped by 1.9% in the previous quarter.

The core retail sales also recovered by 0.4%, beating the median estimate of 0.0%. It had dropped by 1.6% in Q4, signaling that the economy is doing relatively well. 

Another report released on Friday confirmed this view. According to the statistics agency, New Zealand’s exports rose from $6.38 billion in March to $6.42 billion in April. Imports rose from $5.9 billion to $6.3 billion leading to a trade surplus of $91 million.

The NZD/USD pair also reacted to the hawkish Federal Reserve minutes published on Friday. These minutes revealed that most officials were concerned about the state of inflation in the country.

As a result, some of these members considered hiking interest rates in that meeting. Therefore, while the Fed will not hike rates, most analysts believe that they will remain higher for longer since inflation remains above the 2% target.

NZD/USD technical analysis

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NZD/USD chart by TradingView

The daily chart shows that the NZD to USD exchange rate has drifted upwards in the past few weeks. It has risen from a low of 0.5850 to over 0.6100 and is hovering near its highest swing on March 15th.

The 50-day and 25-day Exponential Moving Averages (EMA) have formed a bullish crossover, which is a popular sign. It has also formed a bullish pennant pattern, a popular positive sign. The MACD indicator has moved above the neutral point.

Therefore, the pair’s outlook is bullish, with the initial level to watch being 0.6150, its highest point this week. A break above that level will point to more gains, with the key level to watch being at 0.6215 (March 8 high).

NZD USD Forex Trading Ideas