NZD/USD bulls approach 0.6300 despite NZIER Board’s division on RBNZ rate hike, US debt ceiling drama

• NZD/USD picks up bids to renew intraday high after two-week uptrend.
• US Dollar struggles amid inconclusive debt ceiling talks, mixed comments from Fed officials.
• Odds of RBNZ’s 0.25% rate hike, last week’s upbeat NZ budget keeps Kiwi buyers hopeful.
• Wednesday’s NZ Retail Sales, RBNZ become the key for NZD/USD traders ahead of Fed Minutes, US Core PCE Price Index.

NZD/USD remains on the front foot around 0.6275 as it extends the previous weekly gains despite mixed concerns about the Reserve Bank of New Zealand (RBNZ) on early Monday. In doing so, the Kiwi pair cheers the US Dollar’s retreat amid the absence of a major US debt ceiling announcement, as well as the Federal Reserve (Fed) officials’ mixed comments.

That said, the New Zealand Institute of Economic Research (NZIER) said in its latest report that the Shadow Board is divided over whether the Reserve Bank should increase the Official Cash Rate (OCR) in the May Monetary Policy Statement. However, Analysts at the ANZ stated, “We lifted our peak OCR forecast to 5.75% pre-Budget (on both soaring net migration and the fiscal outlook), and post-Budget, see additional upside risk to that. We’d also now put a 40% likelihood on a 50bp hike on Wednesday (versus 20% pre-Budget). That’s where the market has also settled for now.”

Elsewhere, Reuters mentioned that US President Joe Biden and House Republican Speaker Kevin McCarthy will meet to discuss the debt ceiling on Monday, after a "productive" phone call as the president headed back to Washington,” Reuters quotes to sides. It should be noted that Republicans were less optimistic and paused the talks earlier in the weekend.

On the other hand, Federal Reserve Chairman Jerome Powell highlighted inflation fears on Friday but also stated that the recent banking crisis, which led to tighter credit standards, has eased the pressure to hike interest rates. The same weighed on the hawkish Fed bets and allowed the US Dollar bulls to take a breather.

Amid these plays, Wall Street closed with minor losses and the S&P 500 Futures track the same while US Treasury bond yields grind higher.

Moving on, the NZD/USD pair traders should keep their eyes on the RBNZ interest rate decision for clear directions, especially given the mixed market view about the same. Ahead of that, New Zealand’s first quarter (Q1) 2023 Retail Sales and the US S&P PMIs for May will be important to watch. That said, the Federal Open Market Committee (FOMC) meeting minutes and the Fed’s preferred inflation gauge, namely Core Personal Consumption Expenditure (PCE) Price Index for April, will be important for the Kiwi pair traders to observe after RBNZ.

Technical analysis

Unless crossing a horizontal area comprising multiple tops marked since early February, around 0.6385-90, NZD/USD bulls remain off the table.