New Zealand Dollar, Inflation, Commodity Prices, NZD/USD -Talking Points
- Wall Street pulled lower by technology stocks as earnings season kicks off
- US Dollar weakness and rising commodity prices boost NZD and AUD
- New Zealand Dollar overtakes key moving average as technicals improve
Tuesday’s Asia-Pacific Outlook
Asia-Pacific markets may open lower on Tuesday after Wall Street closed the start of the week on a bearish tone. Technology stocks sold off, with the Nasdaq 100 index dropping 0.96%. Friday saw a multi-month record outflow in the tech-heavy index. Elsewhere, the US Dollar moved lower while Treasuries came under some selling pressure along the curve outside of the 2-year tenure.
The risk-off moves seen in the New York trading session appeared largely contained to the equity space. Investors may be in somewhat of a holding pattern as traders digest the US earnings season. Potential market movers for the week ahead include Netflix, Snap, Intel and American Express. American Express may serve as a proxy to gauge US spending habits following the latest round of stimulus checks.
The Reserve Bank of Australia (RBA) will release minutes from their April policy meeting at 1:30 GMT. Japan will see the February Tertiary Industry Index figures cross the wires after January saw a 1.7% decline. Traders will also have a close eye on the upcoming New Zealand Q1 inflation data print. Given the policy change to include house prices, however, markets may begin shifting more focus on the monthly house price changes versus CPI.
Gains in copper and iron ore prices are helping drive commodity-linked currencies, such as the New Zealand Dollar and Australian Dollar, higher. Iron ore and copper futures gained over 1% on Monday. The global reopening narrative has helped to push industrial metals and lumber prices higher as countries gradually move to open their economies.
NZD/USD Technical Outlook
The New Zealand Dollar has moved higher against the US Dollar to overtake the 50-day Simple Moving Average (SMA), which started to track following the March breakdown in NZD/USD. Momentum appears to be healthy for a possible further rise, with the MACD crossing above its signal line. The psychologically imposing 0.72 level may offer resistance, however.
NZD/USD Daily Chart
Chart created with TradingView
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--- Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwateron Twitter