- NZD / USD retaining minor gains in Asain session.
- The risk on sentiment is pushing demand for the US dollar.
- Kiwi reaps the benefits of the hawkish sight RBNZ.
The selling tone surrounding the US dollar keeps the NZD / USD afloat Tuesday during Asian trading hours. The pair continued to post gains from lows near the 0.7130 level and hit the multi-month high near the 0.7320 area the week before. However, the price is struggling to cross the barrier to trade in known territory.
At the time of writing, NZD / USD is trading at 0.7285, up 0.19% for the day.
Investors seem reluctant to position themselves against the US dollar as inflation fears subside, despite good economic performance.
Market participants feared favorable economic conditions could push the Fed to change its monetary policy. On the contrary, the Fed continues to view inflation as transient and has refrained from typing talks. This, in turn, lessens the attractiveness of the US dollar.
At the same time, a better appetite for risk after the Organization for Economic Co-operation and Development (OECD) raised its global economic outlook for 2021 to 5.8% from 5.6%, applauded investors.
On the other hand, the NZD is in an advanced state of mind after the RBNZ. Economic data in the home country is encouraging, business confidence rose to 1.80% in May from -2% the previous month and building permits jumped to 4.8% in April.
Meanwhile, China’s Caixin manufacturing PMI jumped 52.0% in May from market expectations to 51.9%. The growth of the Chinese economy indirectly benefits the performance of the kiwifruit.
On top of that, New Zealand is backing Australia in a trade dispute with China. This could be seen as a limiting factor for the kiwifruit, as China is New Zealand’s main export trading partner. That said, any sort of disruption could threaten trade and commerce activity between the two countries.
Traders are eagerly awaiting US PMI data for further trading momentum.
Additional levels NZD / USD