The New Zealand Dollar, commonly known as the Kiwi, remains steadfastly positioned in the middle range, poised to conclude the week very close to its opening levels. Dominantly, market dynamics are being influenced by the strength of the US dollar. Moreover, the prevailing risk sentiment is receiving modest, albeit restricted, boosts from an optimistic outlook for China’s economic performance.
As Friday approaches its close, the NZD/USD pairing is showing a modest downtrend, steadily inching toward the 0.5900 threshold without encountering much upward impetus.
Amidst a subdued performance from the Kiwi (NZD) in recent trading, the New Zealand Dollar finds itself vulnerable to the overarching currents of the market as the US Dollar (USD) assumes the role of the primary driving force influencing the pair’s trajectory.
Strong Chinese Data Lifts the Struggling Kiwi
Boosted by China’s stimulus efforts, risk appetite is gaining momentum and providing a safety net for Antipodean currencies, preventing significant declines. China’s latest official data exceeded expectations, with strong performances in industrial production and retail sales, adding a positive touch to market sentiment as the weekend approaches.
Within the NZD/USD market, the scales are tilting in favor of the US dollar, mirroring the broader trend seen in the Dollar Index. However, the USD faced some hesitation due to the disappointing University of Michigan Sentiment Index, which fell from 69.5 to 67.7, along with a decline in inflation expectations from 3.0% to 2.7%.
As the week wraps up, the USD is regaining some traction across various currency pairs.
Technical Outlook on Kiwi
Following a predominantly bearish trend throughout August, the New Zealand dollar stabilized around $0.586 in early September. During this week, the market made an attempt to surpass the 20-day moving average, albeit unsuccessfully. Nonetheless, as the week draws to a close, it remains in close proximity to this key indicator.
The recent formation of narrowing Bollinger Bands, occurring since last week after the market established support at $0.586, suggests the potential for a significant price movement. Presently, the market remains in a bearish context. Notably, the MACD lines within the Moving Average Convergence and Divergence Indicator are exhibiting an upward retracement.
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