NZD/USD bulls attack 0.6235 hurdle on upbeat China Caixin Services PMI, firmer sentiment

• NZD/USD extends Monday’s recovery, takes the bids to refresh intraday high.
• China Caixin Services PMI jumped to 54.5 in June, versus 47.3 expected.
• Hopes of US-China trade peace, firmer Treasury yields underpin immediate bullish bias.
• RBA, risk catalysts and US Factory Orders can be watched for intraday directions.

NZD/USD justifies firmer China data and risk-on mood as buyers poke the monthly resistance around 0.6235 during Tuesday’s Asian session.

China’s Caixin Services PMI for June rallied past market consensus and previous readouts as it flashed 54.5 figure, compared to 47.3 forecasts and 41.4 prior.

In addition to upbeat activity data from the key customer China, risk-on mood and headlines concerning the Sino-American trade deal also appeared to have favored the NZD/USD buyers.

While portraying the mood, the US 10-year Treasury yields pick-up bids to regain 3.0% level up 1.70% intraday by the press time, whereas the S&P 500 Futures rise 0.40% by extending the previous two-day upside near 3,850.

Elsewhere, comments from Chinese Vice Premier Liu He suggests an improvement in the US-China ties, at least for now, which in turn favor the pair buyers due to New Zealand’s (NZ) dependence on Beijing. “The two agreed to need to strengthen communication & coordination of macroeconomic policies between China and the US,” said the macro update conveying telephonic talks between China’s Liu He and US Treasury Secretary Janet Yellen.

It should be noted, however, that the early Asian session release of NZIER Business Confidence and covid fears in China, not to forget the risk of economic slowdown, probe the NZD/USD bulls. That said, NZIER Business Confidence slumped to the lowest levels since March 2020, to -65% versus -40% expected, during the second quarter (Q2) of 2022.

That said, NZD/USD traders need to pay attention to the Reserve Bank of Australia’s (RBA) monetary policy decision for immediate direction due to its close links with Australia. In a case where the RBA manages to please the bulls, the Kiwi pair can extend the latest rebound.

Following that, Factory Orders for May, expected 0.5% versus 0.3%, will be important to watch.

Above all, risk catalysts, as well as the pre-NFP sentiment, not to forget the full markets’ reaction to the recently firmer bond yields, will be crucial to track for clear directions.

Technical analysis

A one-month-old descending trend line resistance near 0.6235 challenges immediate NZD/USD upside ahead of the mid-June swing high near 0.6300. Until then, the downward trajectory towards refreshing the multi-month low marked the last week, near 0.6145, can’t be ruled out. It’s worth noting that the RSI and MACD conditions recently favored the bulls.