NZD/USD renews five-week high above 0.6750 as RBNZ lifts interest rate

• NZD/USD takes the bids to refresh multi-day high during seven-day uptrend.
• RBNZ meets 0.25% rate-hike expectations, cites LSAP bond holdings to put upward pressure on rates.
• Market sentiment dwindles as traders await fresh clues on Russia-Ukraine strory after latest Western sanctions.
• Recently softer Fedspeak highlight each incoming US data for clear directions, geopolitical headlines are the key.

NZD/USD rises 25 pips to recently around 0.6765, up 0.45% intraday, as the Reserve Bank of New Zealand (RBNZ) announced third consecutive rate hike on early Wednesday.

Although the RBNZ matched wide marked expectations with its 0.25% rate-hike to 1.0% level, the comments line, “Sales of the bank’s LSAP bond holdings may put some upward pressure on longer-term interest rates,” seem to keep policy hawks hopeful.

Read: Breaking: RBNZ hikes by 25bps, NZD/USD attempts to break 0.6750

On a different page, recently easing odds of a diplomatic solution to the Russia-Ukraine tussles offered the latest blow to the market’s risk appetite as the US ruled out the scope of a summit between US President Joe Biden and his Russian counterpart Vladimir Putin. On the same line were comments from US Secretary of State Antony Blinken’s rejection of the need for Thursday’s meeting with Russian Foreign Minister Sergei Lavrov.

On the contrary, US President Biden’s comments like, “We have no intention of fighting Russia,” seem to have played the role of turning down the fears of a full-fledged war between the West and Moscow.

Read: White House: A summit between Biden and Putin is 'certainly not in the plans' at this point

At home, New Zealand (NZ) battles with the recently higher covid numbers but stays on the path to gradually ease activity restrictions and international boundaries. “There are a record 3297 new community cases of Covid-19 in New Zealand today - as the country moves closer to phase 3 of the Government's Omicron response,” said NZ Herald. The news also quotes the NZ Health Ministry Statement saying, “One hundred and seventy-nine people, also a record, are in hospital including one person in intensive care.”

Elsewhere, preliminary readings of the US Markit PMIs for February showed the successful transition of the world’s largest economy from the covid-led. However, the Fed policymakers remain cautious while pushing for the 0.50% rate hike. Recently, Dr. Raphael W. Bostic, Chief Executive Officer of the Federal Reserve Bank of Atlanta, said, “Fed is going to "let the data guide us" in upcoming decisions.” The policymaker’s comments were in line with Monday’s statements from Federal Reserve Board Governor Michelle Bowman who mentioned, “It is too soon to tell if the Fed should hike 25 or 50bps in March.”

While portraying the mood, S&P 500 Futures consolidate recent losses with 0.5% intraday gains while the US Treasury yields remain inactive, due to off in Japan, at around 1.94% after rising around 2.0% daily in the previous day.

Looking forward, comments from RBNZ Governor Adrian Orr, up for publishing at 02:00 AM GMT, will entertain NZD/USD traders for now. Following that, the risk catalysts and the Fedspeak are likely to provide fresh impulse amid a light calendar afterward.

Technical analysis

Following the RBNZ verdict, the NZD/USD pair stays above the key resistance confluence comprising 50-DMA and a descending trend line from October 2021, now support around 0.6730. The bullish breakout joins upbeat RSI and MACD signals to keep buyers hopeful of challenging the 0.6800 round figure. However, the 100-DMA and January’s peak, respectively near 0.6860 and 0.6890, will challenge the bulls afterward.

Alternatively, pullback moves remain elusive beyond 0.6730, a break of which will direct NZD/USD bears to December 2021 low surrounding 0.6700.