NZD/USD steadies near 0.6300 amid softer New Zealand PMI, recession woes

• NZD/USD stabilizes around one-week high after posting the biggest daily jump in a month.
• New Zealand’s Business NZ PMI drops to three-month low of 48.1 in March, NZ FinMin Robertson cites recession fears.
• Additional proof of easing in US inflation pressure propels Fed policy pivot talks and drowns Dollar.
• US Retail Sales, Michigan CSI and Consumer Inflation Expectations eyed for further directions.

NZD/USD justifies downbeat New Zealand (NZ) activity numbers by stabilizing around 0.6300, after rising the most in one month to renew the weekly top. Even so, the Kiwi pair remains on the bull’s radar amid broad US Dollar weakness ahead of the final dossier of the US data.

That said, Business NZ PMI for March dropped to the lowest levels in three months, not to forget mentioning a fall below the 50.0 level, as it printed a 48.1 mark for March versus 51.0 expected and 52.0 prior. Further, the Visitor Arrivals also eased to 4.998% from 6.480% prior but came in better than 2.1% market forecasts.

Also challenging the Kiwi pair buyers are the latest comments from New Zealand Finance Minister (FinMin) Grant Robertson as he said that New Zealand might have a recession, but it will be a shallow one. The diplomat, however, also stated that New Zealand economy is resilient and robust, which in turn puts a floor under the NZD/USD price.

It’s worth noting, however, that the downbeat signals of the US inflation bolstered calls for the Federal Reserve (Fed) policy pivot and weighed on the US Dollar. That said, US Producer Price Index (PPI) for March dropped to a four-month low of -0.5% MoM versus 0.0% expected and prior whereas the PPI YoY also declined to 2.7% from 4.9% previous readouts, versus market forecasts of 3.0%. Further, US Initial Jobless Claims rose to 239K versus 232K expected and 228K prior.

While cheering the broad US Dollar weakness, the NZD/USD pair also ignores mixed China trade numbers as the Trade Balance improved to $88.10B in March versus the $39.2B expected and $116.8B prior whereas Exports grew much faster than Imports during the stated month.

Apart from the softer US data, recent comments from the global rating agency Fitch also favors NZD/USD bulls as it said that solid fundamentals are supporting Australian and New Zealand banks in a more difficult environment.

Amid these plays, Wall Street remained firmer and the yields also improved but the US Dollar Index (DXY) dropped to the lowest levels since February. Additionally, the CME’s FedWatch Tool signals a 68% chance of a 0.25% rate hike in March versus 71% marked the previous day.

Looking forward, US Retail Sales for March, expected to repeat -0.4% MoM figure, precedes the preliminary readings of the US Michigan Consumer Sentiment Index (CSI), likely staying unchanged at 62, to entertain NZD/USD traders. Also important to watch will be the University of Michigan’s (UoM) 5-year Consumer Inflation Expectations, prior 2.9%.

Technical analysis

Multiple failures to provide a daily closing beyond the 100-DMA, around 0.6305 by the press time, challenges NZD/USD bull’s optimism. The pullback moves, however, remain elusive unless the quote remains beyond the 200-DMA support of 0.6165.