The New Zealand dollar started the trading week with a whimper. At time of writing, NZD/USD was trading at 0.7000, down 0.14% on the day. Since mid-August, the currency has taken riders on a roller-coaster ride over the past couple of weeks. Last week, the kiwi climbed 2.71%, its best weekly performance since August 2020. This followed a sharp decline of 3.10% a week earlier.
Will NZ Business Confidence Slide Continue?
New Zealand released ANZ Business Confidence on Monday. The index was sputtering, with a read of -3.8 in July and only one gain in the past five months. With the country grappling with an uptick in COVID cases (although the numbers are a fraction of what we are seeing elsewhere) and the government responding with nationwide lockdowns, business sentiment could continue to fall in August.
Risk sentiment has risen after Fed Chair Jerome Powell’s Jackson Hole speech on Friday. Powell’s speech was closely watched, and market sentiment rose after his remarks. Yet Powell’s message didn’t break any new ground—the Fed Chair said the Fed would likely begin tapering before the end of the year, but rate hikes were not imminent, as the economy still had “much room to cover” before full employment was achieved.
The next key date for investors to circle on their calendars is Sept. 22, when the Fed holds its next policy meeting. Fed officials have been hinting that a timeline for tapering could be announced on that date. However, the timing of a rate hike is less clear.
In his speech, Powell took pains to remind the market that there was no link between tapering and a rate hike. Still, it seems a safe bet that the announcement of a taper would trigger widespread speculation about a rate hike and would be a bullish event for the US dollar.
NZD/USD Technical
- Resistance was at 0.7080 and 0.7147
- On the downside, there was support at 0.6884. Below, there was support at 0.6775