NZDUSD on Friday rose 1.38% to 0.62320. Week ending 2024-08-23 rose 2.88%. What’s going on.

NZDUSD Analysis

Performance
Period	Pct	Chg	Momentum
Friday	1.38%	84.6 Pips
Week 2024-08-23	2.88%	174.5 Pips	August	4.71%	280.2 Pips

Upcoming key events for the new week (London Time)

Thu 01:30 PM Initial Unemployment Insurance Claims
Thu 01:30 PM GDP annual rate
Fri 01:30 PM PCE Price Index (excluding food and energy) (1-mth)
Fri 01:30 PM PCE Price Index (excluding food and energy) (12-mth)

What happened over the week

In the United States, Fed Chair Jerome Powell’s comments at the Jackson Hole Symposium suggested the potential for interest rate cuts in September, citing a cooling labor market and economic uncertainty. Concurrently, U.S. Initial Unemployment Insurance Claims for the week ending August 17 rose to 232K from the previous week’s revised figure of 228K. These indicators orient toward a softening job market, which aligns with Powell’s signal of possible rate cuts, indicating a more dovish monetary stance by the Federal Reserve. The implications of these developments are already being factored into market expectations.

From New Zealand, the latest data from Statistics New Zealand indicate a weakening retail sector. Retail Trade Turnover in the second quarter fell by 1.2%, a significant decline from the previously revised figure of 0.4%. Moreover, retail sales excluding motor vehicles also dropped to -1% from 0.3% in Q2. Contributing to the economic mix, New Zealand’s July trade balance improved slightly to -9.29 billion NZD from a revised June figure of -9.4 billion, accompanied by a small drop in exports to $6.15 billion and a substantial increase in imports to $7.11 billion.

The contrasting economic performance and monetary policy outlooks between the United States and New Zealand have influenced the NZD/USD exchange rate. The NZD/USD rose by 1.38% to 0.62320 on Friday and posted a weekly gain of 2.88%. Powell’s dovish tone suggesting potential rate cuts diminishes the USD’s strength, making high-yield currencies like the NZD more attractive despite weaker domestic data. However, the actual future direction of NZD/USD will depend on upcoming key U.S. economic data releases, such as Initial Unemployment Insurance Claims, GDP annual rate, and the PCE Price Index, which are expected to have high impacts on the currency pairing. Any deviation from expected figures could cause considerable market volatility and influence investor sentiment regarding the USD and NZD.

From X (Twitter)

Latest release: Retail activity falls by 1.2 percent.https://t.co/XDEXYyMGNR pic.twitter.com/FVpMCfxzf0

— Stats NZ (@Stats_NZ) August 22, 2024

What can we expect from NZDUSD for the new week and what happened on Friday?

NZDUSD on Friday rose 1.38% to 0.62. Price is above 9-Day EMA while Stochastic is rising in overbought zone. For the week ending 2024-08-23, the pair rose 2.88% or 174.5 pips higher.

Looking ahead, NZDUSD looks bullish as the pair ended higher after Friday trading session.

For the new week, our technical outlook looks bullish, immediate upside resistance level at 0.63 (WR1) with break above could target 0.63 (WR2). On the downside, we are looking at week low of 0.61 as an important support. Break below this level could weaken the current bullish momentum. A break above 0.62 would suggest bullish bias after recent positive movement.

For the month of August, NZDUSD is up by 4.71% or 280.2 pips higher.

Weekly key levels to watch out:

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Powell, Review and Outlook Source: Federal Reserve
Quarterly Services Survey Source: Census Bureau
Minutes of the Federal Open Market Committee, July 30–31, 2024 Source: Federal Reserve