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bullish sentiment amid rising NZ Covid cases

The NZD/USD held steady on Thursday morning after the relatively strong economic data from New Zealand. The pair rose to 0.7063, which was the highest level since August 4 this year. It has risen by more than 3.80% in the past few days.

New Zealand trade numbers

The NZD/USD price rose in early trading after New Zealand published strong economic data. The country’s export prices rebounded in the second quarter, rising from -0.8% to 8.3%. This was a stronger performance than the median estimate of 3.0%. At the same time, the exports volume rose by 2.9% after it dropped by 2.9% in the previous quarter.


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The same trend happened in the imports side. The country’s import prices rebounded by 4.8% as the cost of most items rose globally. As a result, the total terms of trade rose from 0.1% to 3.3%, which was better than the median estimate of 2.5%. 

These numbers show that New Zealand’s economy did relatively well. Besides, data published in July showed that the country’s unemployment rate declined substantially during the quarter.

It is against this backdrop that the Reserve Bank of New Zealand (RBNZ) turned substantially hawkish. It ended its massive bond-buying program and hinted at higher interest rates.

However, recently, the country’s outlook has changed as the number of Covid-19 cases has surged. The country has continued to report a gradual increase of cases even as the government implements its lockdown. Therefore, there is a possibility that the RBNZ will maintain a wait-and-see attitude in the next few weeks.

The next key mover for the NZD/USD will be the latest employment numbers from the United States. On Thursday, data showed that the private sector added 374k jobs last month. The official US non-farm payrolls numbers will come out on Friday.

NZD/USD forecast

NZD/USD

The four-hour chart shows that the NZD/USD has been in a strong bullish trend in the past few weeks. Along the way, it has formed a V-shaped recovery and moved above the 25-day and 50-day moving averages. The pair has also moved above the Ichimoku cloud and the dots of the Parabolic SAR. 

Therefore, the outlook for the pair remains bullish ahead of the US NFP data. The next key level to watch will be the resistance level at 0.7100. On the flip side, a drop below the key support level at 0.6990 will invalidate this view.

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