NZD/USD remains pressured around 0.6800 with eyes on China inflation, Ukraine
|- NZD/USD defends 0.6800 the figure after a two-day downtrend.
- New Zealand Q4 Manufacturing Sales rallied 8.2% versus -6.4% prior.
- Market sentiment dwindles even as Ukraine steps back from NATO membership intentions.
- Beijing’s trade link with NZ highlights China CPI, geopolitical headlines are the key.
NZD/USD treads water around 0.6800 round figure during early Wednesday morning in Asia. The Kiwi pair recently failed to cheer upbeat New Zealand (NZ) data as previously upbeat sentiment fades.
New Zealand’s Manufacturing Sales for the fourth quarter (Q4) of 2021 not only reversed the previous 6.4% contraction but rallied to 8.2%.
However, indecision over the Ukraine-Russia crisis, as well as waiting for inflation data from the key customer China, seems to have challenged the NZD/USD buyers of late.
Headlines from AFP, saying that Ukraine is reportedly no longer insisting on NATO membership seem to favor the earlier risk-on mood in the US session. On the same line was the confirmation of the first humanitarian corridor in Ukraine.
Though, sanctions on Russia's energy supplies from the US and the UK challenged the market’s optimism. The move was well-responded by Russian President Vladimir Putin as he bans the export of products and raw materials out of the Russian Federation until December 31.
Talking about data, the US trade deficit rallied to a record high and the small business confidence, as signaled by IBD/TIPP Economic Optimism gauge for March, dropped to the lowest in 13 months.
Amid these plays, Wall Street closed mixed after an initially positive performance whereas the US 10-year Treasury yields rose six basis points (bps) to 1.84% by the end of Tuesday’s North American session.
Looking forward, Consumer Price Index (CPI) and Producer Price Index (PPI) from China, expected 0.8% and 8.7% versus 0.9% and 9.1% respectively, will direct immediate moves of the NZD/USD pair. However, major attention will be given to the risk catalysts, especially relating to the Ukraine-Russia issue.
Technical analysis
Sustained trading below the 100-DMA, around 0.6835 by the press time, directs NZD/USD traders towards an ascending support line from late January, close to 0.6715 at the latest.
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