NZD/USD bulls ignore downbeat NZIER report near 0.6150, focus on New Zealand GDP, US inflation

• NZD/USD prints two-day winning streak as US regulators tame financial market risks.
• NZIER anticipates much weakness growth in 2024, Thursday’s New Zealand Q4 GDP eyed.
• Easing fears from SVB, Signature Bank renew market’s risk-on mood.
• Mixed US employment data, anxiety ahead of key data/events probe Kiwi pair buyers.

NZD/USD defends Friday’s recovery around 0.6150-55 as market sentiment improves on early Monday. In doing so, the Kiwi pair pays little attention to the downbeat report from the New Zealand Institute of Economic Research (NZIER).

“The latest NZIER Consensus Forecasts show an upward revision to the near-term growth outlook for the New Zealand economy but a downward revision for the subsequent two years,” per the March 2023 NZIER report. The think-tank also adds that annual average GDP growth is forecast to slow to 0.3 percent for the year to March 2024 before picking up to 1 percent in the following year. 

The NZD/USD pair’s upside could also be linked to the pacific nation’s Business NZ PSI for February, 55.5 versus 54.5 prior, as well as Food Price Index for the said month, 1.5% MoM compared to 0.6% market consensus and 1.7% previous readings.

Elsewhere, the risk profile benefits from the US regulators’ efforts to tame the financial market risks emanating from the Silicon Valley Bank (SVB) and Signature Bank. That said, US Treasury Department, Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) took joint actions to tame the risks emanating from the SVB and Signature Bank during the weekend.  “All depositors of Silicon Valley Bank and Signature Bank will be fully protected,” said the authorities in a joint statement released a few minutes back.

While portraying the mood, the US 10-year Treasury bond yields pare the biggest daily loss in four months near 3.75% while the S&P 500 Futures also rebound from a nine-week low.

It should be noted that the fears emanating from the SVB and Signature Bank drowned the US Treasury bond yields and the US Dollar the previous day, which in turn allowed the NZD/USD to remain firmer despite the risk-off mood.

The US Dollar, on the other hand, failed to cheer the mostly upbeat employment report for February, amid downbeat yields. That said, the US Nonfarm Payrolls (NFP) grew more than 205K expected to 311K in February, versus 504K (revised), while the Unemployment Rate rose to 3.6% for the said month compared to 3.4% expected and prior. Further, the Average Hourly Earnings rose on YoY but eased on monthly basis for February whereas the Labor Force Participation increased during the stated month.

Looking ahead, US Consumer Price Index (CPI) for February, up for publishing on Tuesday, will be crucial for the NZD/USD pair traders ahead of Thursday’s New Zealand fourth quarter (Q4) Gross Domestic Product (GDP).

Technical analysis

NZD/USD recovery remains elusive unless crossing a one-month-old descending resistance line, around 0.6190 by the press time.