NZD/USD remains pressured around 0.6700 on mixed NZ data, RBNZ’s Orr and Russia-Ukraine crisis

• NZD/USD fails to pare the biggest daily loss in five months, fades bounce off one-week low.
• NZ Retail Sales rallied in Q4 but trade deficit widened, RBNZ’s Orr showed concerns over inflation.
• Markets panicked as Russia invaded Ukraine from all three sides, international sanctions escalate.
• Geopolitical updates are the key catalyst to watch, US data, Fedspeak may offer additional directions.

NZD/USD drops back below 0.6700, around 0.6690 by the press time, as mixed data from New Zealand (NZ) joins the broad risk-aversion due to the Russian invasion of Ukraine. In doing so, the kiwi pair reverses the corrective pullback from weekly low during the early hours of Friday’s Asian session.

New Zealand Q4 Retail Sales reversed the previous contraction of 8.1% with 8.6% of growth, versus -2.2% expected figures. Further, the Trade Balance dropped to $-1082M and $-7.71B MoM and YoY respectively, way below the $-477M and $-6.78B monthly and yearly figures in that order.

Although mixed NZ data could be spotted as the latest burden on the NZD/USD prices, the market’s risk-off mood was the major blow to the Kiwi pair. The quote flashed the biggest daily loss in five months on Thursday as Russia finally invaded Ukraine from land, sea and air, without caring for international sanctions.

Apart from the data, Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr recently crossed wires saying, “We’re particularly concerned about inflation expectations,” considering conditions in Ukraine. The policymaker also said, “Keep the possibility of moving rates quicker if necessary.”

As per the latest updates, Moscow’s military acquired Chernobyl and Ukraine President Zelenskyy signed a decree for general mobilization. Further, the Western leaders have announced more sanctions for Russia and showed readiness to support Kyiv with military power if conditions worsen. However, comments from Russia, like “Moscow is willing to negotiate the terms of Ukraine's surrender,” seemed to have triggered the latest bounce.

That said, Wall Street closed with mild gains after the initial plunge whereas the US 10-year Treasury yields closed more or less at the same level the previous day, after marking a volatile day.

It should be noted that the second reading of the US Q4 GDP matched 7.0% annualized forecasts but firmer figures of Personal Consumption Expenditure, Chicago Fed National Activity Index and Jobless Claims seemed to have added to the US dollar’s strength. Also favoring the greenback to stay firmer at the fresh 2022 high are the comments from Atlanta Fed President and FOMC member Raphael Bostic who favored three rate hikes this year. On the same line was Richmond Fed President and FOMC member Thomas Barkin said on Thursday that he hopes the Fed can restore interest rates back to pre-pandemic levels fairly quickly, reported Reuters. However, Cleveland Fed President Loretta Mester said on Thursday that she doesn't think raising interest rates by 50 bps in March is compelling, according to Reuters. 

Moving on, geopolitical catalysts are the key for markets while US Core PCE Inflation data and Durable Goods Orders may join Fedspeak to offer extra directives.

Technical analysis

Despite posting the first daily closing below 50-DMA since Monday, NZD/USD refrained to break a one-month-old rising trend line, at 0.6650 by the press time, on a closing basis. The same favor the odds of a corrective pullback towards regaining above the stated DMA level, near 0.6730 at the latest.