NZD/USD renews daily high above 0.6300 as NZ Budget appears optimistic

• NZD/USD picks up bids to renew intraday top after New Zealand’s annual Budget Release.
• NZ FinMin Robertson sounds hopeful on economic recovery, expects OBEGAL surplus in 2024/25.
• Softer USD, easing China covid cases also underpin the corrective pullback.
• Risk-aversion keeps bears hopeful ahead of second-tier data, qualitative catalysts should be watched carefully.

NZD/USD consolidates the previous day’s losses around 0.6310, renewing intraday top after upbeat New Zealand (NZ) Budget on early Thursday. In addition to the NZ Budget, a softer USD also underpins the Kiwi pair’s corrective pullback of late.

“Economy expected to be robust in the near term,” said New Zealand Finance Minister (FinMin) Grant Robertson presents the annual budget. The office also expects “a budget deficit of NZ$18.978 billion ($11.95 billion) for the fiscal year ending June 30, narrower than a deficit of NZ$20.844 billion forecast in its half-year fiscal update in December,” per Reuters. The update also expect Operating Balance Before Gains, Losses (OBEGAL) to return to surplus in 2024-25.

Read: NZ FinMin Robertson: Economy expected to be robust in near term

Given the US dollar pullback joining the upbeat comments from NZ FinMin, NZD/USD had reasons to extend the early Asian recovery moves to refresh the intraday high. Also supporting the Kiwi pair buyers are recent China covid numbers suggesting a drop in the daily covid cases and death tolls to 1,082 and one respectively, versus 1,305 and three in that order.

That said, an absence of major data/events and repeated comments from the Fed policymakers seemed to have recently paused the risk-aversion wave.

Amid these plays, US 10-year Treasury yields regain the 2.90% level after declining 11 basis points (bps) to 2.88% the previous day. Even so, the S&P 500 Futures drop 0.50% and the US Dollar Index (DXY) dropped 0.17% intraday at the latest.

Moving on, NZD/USD traders will pay attention to the risk catalyst and second-tier housing/activity numbers from the US for fresh impulse. Overall, the bears are likely to keep the reins.

Technical analysis

NZD/USD pair’s inability to cross one-week-old horizontal resistance near 0.6375-85, as well as failure to remain well past a monthly descending trend line, close to 0.6335, keeps the pair sellers hopeful.

Alternatively, bears remain directed towards the area comprising the monthly low, also the lowest levels since 2020, around 0.6225-15.