NZD/USD breaks below 0.6700 on increasing escalation of Russia/Ukraine crisis

• Despite a risk-off market mood in the week, the NZD/USD is up 0.80%.
• Geopolitical headlines put aside macroeconomic and fundamental data, dominating the headlines.
• US Jobless Claims unexpectedly jumped, while Philadelphia Fed Index decreased.
• NZD/USD Technical Outlook: A daily close under 0.6700 would exacerbate a move towards 0.6500.

The New Zealand dollar slides amid a risk-off market mood, courtesy of the Russia/Ukraine conflict escalation. At the time of writing, the NZD/USD is trading at 0.6698. 

Geopolitical jitters dominate the market mood

Since Friday of last week, developments of the Russia/Ukraine conflict have been blamed for the swings in the financial markets. European and US equity indices remain in the red, while in the FX space, safe-haven peers like the USD, the JPY, and the CHF are sought by investors.

In an update of the eastern Europe conflict, Russia stated that Ukraine committed war crimes in Donbas, as stated by a letter to the UN. Meanwhile, the US raises the possibility of Russia’s “false-flag” operation as a “pre-text” to invade Ukraine. In the last hour, the White House reiterated its commitment to diplomacy, per remarks of US Secretary of State Blinken at the UN.

US Initial Jobless Claims increase while Building Permits increase

Before Wall Street opened, US macroeconomic data crossed the wires. Initial Jobless Claims rose 248K higher than the 219K for the week ending on February 19. At the same time, Building Permits rose to 1.899M better than the 1.76M foreseen, while the Philadelphia Fed Manufacturing Index decreased from 16 to 20, estimated.

During the Asian session, ex-RBNZ member Arthur Grims said that he believes the central bank should hike the benchmark rate by 75 basis points (bps) at next week’s meeting. Furthermore, Grimes noted that “to think of unemployment at 3.2%, with 6 % inflation, and if they increase rates by 25 basis points then the Official Cash Rate will be at 1%, it just doesn’t make sense.”

NZD/USD Price Forecast: Technical outlook

The NZD/USD daily chart depicts the pair as neutral-downward biased, regardless of RBNZ’s commencing its tightening cycle in 2021. The daily moving averages (DMAs) above the spot price adds another signal to the aforementioned.

That said, the NZD/USD first support would be February 10 daily low at 0.6652. Breach of the latter would expose February 14 0.6592 daily low, followed by January 28 cycle low at 0.6528.