NZD/USD ignores upbeat New Zealand trade data around 0.5680 amid dicey markets

• NZD/USD remains sidelined following a pullback from the weekly top.
• New Zealand’s Trade Balance improved in September, Exports grew as well but Imports eased.
• Upbeat mood initially favored Kiwi pair before dragging it on the recession woes.
• RBNZ, Fed both are likely to announce 75 bps rate hike but the rush to risk-safety put USD ahead.

NZD/USD pays little heed to New Zealand’s (NZ) trade data for September amid the early hours of Friday’s Asian session. That said, the Kiwi pair seesaws around 0.5680 after retreating from the weekly high near 0.5745. Even so, the quote is likely bracing for the strongest week since early August.

NZ Trade Balance improved to $-11.95B YoY in September versus $-13.19B expected and $-12.5B prior (revised from $-12.2B). Further, Imports eased to $7.64B from $7.92B prior while Exports rose to $6.03B compared to 5.29B previous readings. Overall, the Pacific nation’s trade numbers were positive enough to favor the NZD/USD bulls but could not.

The reason could be linked to the shift in the market’s mood, mainly due to the fears of recession and higher rates, which in turn propelled the Treasury bond yields and the US dollar.

That said, mostly firmer US data and hawkish Fedspeak also favored the greenback to pare recent losses even as the initial optimism weighed on the quote.

US Initial Jobless Claims eased to 214K for the week ended on October 07 versus 230K expected and a revised down 226K prior. Further, Philadelphia Fed Manufacturing Survey Index dropped to -8.7 for October versus the -5 market consensus and -9.9 previous reading. Additionally, US Existing Home Sales rose past 4.7M expected to 4.71M but eased below 4.78M prior.

Recently, Federal Reserve Governor Lisa Cook mentioned that ongoing rate increases will be required.

It’s worth noting that China’s debate on reducing quarantine time for international visitors seemed to have favored the Kiwi pair buyers earlier on Thursday.

Moving on, a lack of major data/events could keep the NZD/USD on a dicey floor but the risk catalysts will be crucial to watch for clear directions. Also to keep in mind that the NZD/USD downside appears limited due to the hawkish bias over the Reserve Bank of New Zealand’s (RBNZ) next move.

Technical analysis

The first daily closing beyond the 21-DMA in two months join a weekly support line to keep the NZD/USD buyers hopeful unless the quote breaks 0.5640 level. The recovery moves, however, need validation from monthly high of 0.5815.