NZD/USD bounced off near two-year lows on the final day of June, with greenback sales facilitating the move. While the kiwi came under some pressure in reaction to local consumer sentiment gauge released in local hours, U.S. data took focus later in the day. The U.S. dollar gave up its earlier gains as core PCE & personal spending both printed slightly below forecast levels.
- On top of that, potential profit-taking ahead of month-end rebalancing may have played a role in sapping some strength from the greenback.
- Cross-asset signals may have kept a lid on the kiwi, as equity sentiment was broadly negative and the VIX index edged higher, while BBG Commodity Index slumped to a four-month low.
- Despite Thursday's uptick, spot NZD/USD is hovering close to recent cyclical lows. It last sits at $0.6235, down 9 pips on the day.
- Key near-term bearish target is located at $0.6197, which limited losses on Jun 14, with the $0.6200 area providing a firm layer of support in recent weeks. Below there lies May 25, 2020 low of $0.6084.
- Bulls look to a rally above $0.6327, which capped gains on Jun 24 & 27. A clean break here would bring Jun 16 high of $0.6396 into play.
- New Zealand's ANZ-Roy Morgan Consumer Confidence Index fell to 80.5 in June from 82.3 recorded in May. Most sub-indices deteriorated, although the share of people who thought it was a good time to purchase a major household item jumped 9 points. ANZ commented that the index was "a touch above its record low, but still deep within the “something to worry about” zone."
- This comes on the heels of ANZ Business Outlook Survey that hit the wires yesterday, showing further deterioration in business conditions and particularly weak profitability expectations.
- Looking ahead, New Zealand building permits will be out shortly.
Fig. 1: New Zealand ANZ Consumer vs. Business Confidence
Source: MNI - Market News/Bloomberg