NZD/USD rises over 0.6300 on stronger New Zealand data; attention on PBOC, Powell of the Fed

During Monday's Asian session, the NZD/USD is trading around 0.6320 while holding the prior three-week rise. The most recent increases in the kiwi pair might be attributed to New Zealand's May services activity statistics as well as news from China.

The Business NZ PSI for May surpassed the previous reading of 52.2 to reach 55. The private activity report accompanies the optimistic Business NZ PMI data that was released last week, therefore boosting expectations for another hawkish surprise from the Reserve Bank of New Zealand (RBNZ).

A piece of news from Reuters stating that President Joe Biden's administration is examining the elimination of some tariffs on China, along with positive news from Beijing, shows that covid worries are diminishing, favoring a comeback in the NZD/USD pair.

Moreover, Friday's disappointing US statistics provide the Kiwi pair with extra positive impetus. In spite of this, US Industrial Production for May fell to 0.2 percent MoM, below the market's expectation of 0.4 percent and the preceding reading of 1.4 percent. The data indicated a stable capacity utilization and a decline in industrial output. Despite worse US statistics, the Federal Reserve's (Fed) semi-annual Monetary Policy Report indicated that the Gross Domestic Product (GDP) appeared to be on pace for modest growth in the second quarter, as reported by Reuters.

However, China's testing of anti-ballistic missiles and the Fed's hawkish rhetoric should be among the primary indicators that impose downward pressure on the NZD/USD exchange rate. Governor Christopher Waller of the Federal Reserve stated recently that he will support a 75 basis point interest rate rise in July provided the data fulfills his predictions.

In response to these bets, US stocks exhibited a lackluster relief rally, and Treasury rates were equally lackluster.

Amidst a sparse domestic schedule, the upcoming testimony of Fed Chairman Jerome Powell has become this week's most significant event. However, if the People's Bank of China (PBOC) manages to surprise the markets with a rate adjustment, today's interest rate announcement might also be of interest to NZD/USD traders.

Technical Evaluation

Despite the corrective retreat, the NZD/USD pair is up against the 10-day simple moving average (SMA) near 0.6330, a breach of which may send the pair towards the swing low from early June near 0.6360. Until then, the New Zealand dollar-U.S. dollar pair is anticipated to stay headed toward the annual low established in the previous week near 0.6195.