NZD/USD bulls prod 0.6200 as RBNZ defends hawks, UK-New Zealand trade deal looms

• NZD/USD grinds near intraday high during three-day uptrend.
• RBNZ rules out challenges to NZ banks from higher rates, NZ PM will meet British counterpart for FTA deal.
• Hawkish Fed bets, First Republic bank induced challenges to risk prod Kiwi pair buyers.
• New Zealand jobs report, US NFP appear the key data to watch for clear direction.

NZD/USD clings to mild gains around 0.6180 as the Kiwi pair buyers cheer upbeat catalysts at home while struggling with the US Dollar strength during early Monday.

The Kiwi pair’s latest gains could be linked to the Reserve Bank of New Zealand’s (RBNZ) latest commentary to defend the rate hikes. Also positive for the NZD/USD bulls are the hopes of a Free Trade Agreement (FTA) between New Zealand (NZ) and the UK as NZ PM Chris Hipkins recently announced he will meet his UK counterpart Rishi Sunak at 10 Downing Street this week to advance the two countries’ FTA.

The policymaker also said, “It’s estimated the FTA will see New Zealand goods exports to the UK increase by over 50 percent, boost New Zealand’s annual GDP by up to $1 billion and save approximately $37 million per year on tariff elimination from day one.”

On the other hand, the RBNZ released an excerpt of its May 2023 Financial Stability Report amid the ongoing banking fears due to the First Republic Bank’s latest fallout. The updates mentioned that banks in the country have relatively little risk from surging interest rates as they are required to hold sufficient capital to cover potential losses.

It’s worth noting, however, that the recently upbeat prints of the US Core PCE Price Index and early signals of the US inflation have propelled the hawkish Fed bets and underpinned the US Dollar’s rebound. That said, the US Dollar Index (DXY) renews its intraday high near 101.80 during a three-day uptrend as market players cheer on recently firmer US data while also rushing toward the greenback on fears emanating from the First Republic Bank.

Amid these plays, S&P 500 Futures remain directionless while the US Treasury bond yields pare the previous day’s heavy losses amid holidays in multiple markets including China, the UK, India and Europe.

Looking forward, intraday NZD/USD buyers may keep the reins ahead of the US ISM Manufacturing PMI for April. However, Wednesday’s NZ jobs report, US Federal Open Market Committee (FOMC) and Friday’s US Nonfarm Payrolls (NFP) will be crucial to watch for clear directions.

Technical analysis

A daily closing beyond the 200-DMA and a downward-sloping resistance line from early April, now immediate support near 0.6160-55, keeps NZD/USD buyers hopeful.