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Bullish Momentum Fades Ahead Of RBNZ Meet


NZD/USD retreated to its worst levels in more than a week Thursday as the Fed continued to beat the hawkish drum while U.S. jobless claims matched a 54-year low. The rate trades flat at $0.6893 in the early part of the Asia-Pac session.

  • The sell-off inaugurated by a Doji candlestick charted on Apr 5 leaves bears on the lookout for a broader reversal amid signs that the recent uptrend may soon be challenged. A break under channel floor/Mar 22 low at $0.6873/64 would signal potential for further weakness.
  • Bulls find some reassurance in the 50-DMA's recent move above the 100-DMA and hope for a rebound above $0.7034, which capped gains on Apr 5 marking a fresh cycle peak.
  • New Zealand's ANZ Truckometer Heavy Index rose 1.8% M/M in March, with the February reading revised to +0.8% from +1.4%. ANZ noted that the data suggest "a small positive outturn" for Q1 GDP.
  • The RBNZ are preparing for a monetary policy meeting next week, which will almost certainly see them deliver another hike to the OCR. The main question concerns the magnitude of the rate increase, with many sell-side analysts sitting on the fence. Market pricing favours an outsized 50bp hike, implying a two-to-one probability of such an outcome at the end of next week's MPC meeting.
  • On the data front, next week's highlights include card spending (Monday) and BusinessNZ M'fing PMI (Thursday).

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