The NZD/USD pair has been on a downward trend, reaching levels near 0.5880 during the Asian trading session. This decline can be attributed to investors seeking safe-haven assets like the US Dollar amid escalating tensions in the Middle East. Traders are closely monitoring Israel’s response to Iran’s recent airstrike, which has added to the cautious stance in the market. The upcoming release of New Zealand’s Consumer Price Index (CPI) data for the first quarter of 2024 is also being anticipated, with market expectations suggesting a modest increase of 0.6% quarter-on-quarter.
China, a key trading partner of New Zealand, recently released its economic data, showing a rise in Gross Domestic Product (GDP) by 1.6% QoQ in the first quarter of 2024. The GDP year-over-year also exceeded expectations at 5.3%. Despite this positive data, the NZD failed to respond, indicating a possible decoupling of the NZD from Chinese economic trends. The Chinese foreign ministry strongly condemned the attack on the Iranian embassy in Syria, further underlining the geopolitical tensions in the region.
US Dollar Strength on Retail Sales Data
The US Dollar has been gaining strength, driven by better-than-expected Retail Sales figures. March’s Retail Sales (MoM) rose by 0.7%, surpassing market forecasts of 0.3%. This positive data has raised expectations of the Federal Reserve maintaining higher policy rates for a longer period, damping hopes of potential monetary policy easing. The Retail Sales Control Group also saw a significant increase of 1.1%, indicating a strong consumer spending trend in the US economy.
Investors are now turning their attention to upcoming US housing data scheduled for release and Fed Chair Jerome Powell’s speech at the Washington Forum. These events are likely to provide further insights into the US economic outlook and the Fed’s monetary policy stance. Traders will be closely monitoring any developments in the geopolitical landscape, particularly Israel’s response to Iran, as it could have a significant impact on market sentiment and currency movements.
The NZD/USD pair is facing downward pressure due to geopolitical uncertainties, while the US Dollar is strengthening on positive Retail Sales data. The upcoming economic releases and geopolitical developments will play a crucial role in shaping the currency markets in the coming days. Investors should remain cautious and stay informed about the latest news and events that could influence trading decisions.