New Zealand Dollar, NZD/USD, AU-NZ Travel Bubble, Covid -Talking Points
- US stocks edge higher following a largely uneventful FOMC minutes
- Australia and New Zealand travel bubble likely to bolster economic activity
- NZD/USD may see a short-term pullback within a Falling Wedge pattern
US stocks closed slightly higher on Wednesday following the Federal Open Market Committee’s March meeting minutes. The minutes didn’t have a directional impact on markets, but traders keyed into the report to gain insight into where Fed policy may be heading as the post-pandemic outlook clears. Technology stocks outperformed, with the Nasdaq 100 closing 0.28% higher on the day.
The FOMC minutes highlighted financial market condition, with a focus on the rise seen in government bond yields, stating “Market participants highlighted an improving economic outlook, bolstered by passage of the American Rescue Plan (ARP) and progress on vaccinations, as underlying the increase in yields.” The 10-year Treasury yield has climbed over 80% since January and has, at times, pressured equity valuations.
Vaccinations are indeed progressing in the United States. So much so that President Joe Biden earlier this week moved the eligibility deadline for adults to April 19 from May 1. According to Johns Hopkins University, nearly 60 million Americans have now been fully vaccinated. The US is now one of the global leaders in the race to fully vaccinate its population.
However, Dr. Rochelle Walensky, CDC Director, said on Wednesday that the B.1.1.7 variant, first discovered in the UK, is now the most common strain circulating in the US. Virologists are concerned this more contagious strain could set back progress in the fight against Covid. Health experts are still assessing how much protection current vaccines offer against the various strains circulating throughout the world, with mixed evidence as to the extent of protection offered by current versions of approved vaccines.
Thursday’s Asia-Pacific Outlook
Asia Pacific equity markets traded slightly higher outside of China on Wednesday. However, Hong Kong’s Hang Seng Index (HSI) and China’s CSI 300 fell 0.91% and 0.71%, respectively. The Hang Seng’s loss marked the first day of trading after an extended holiday weekend. The Reserve Bank of India (RBI) left its benchmark rate unchanged at 4%.
The economic docket for today’s session has Markit PMI for Hong Kong on tap as well as New Zealand business confidence and consumer confidence for Japan, according to the DailyFX Economic Calendar. Later this week will see inflation data out of China and the Reserve Bank of Australia’s (RBA) Financial Stability Review.
Meanwhile, New Zealand and Australia are set to open a travel corridor on April 18. The move marks a major step forward in reopening in the two neighboring nations since restricting border access last March as the pandemic swept across the globe. While there are restrictions in place, it will likely boost tourism and business travel which will translate to increased economic activity.
NZD/USD Technical Outlook
The New Zealand Dollar fell overnight against the US Dollar, adding to broader losses from its February swing high. A Falling Wedge pattern is in play, with prices trending to the midpoint between resistance and support. Typically a continuation pattern, NZD/USD may exit this pattern to the upside and resume the longer-term trend from 2020. For now, however, a bearish MACD cross below the centerline and declining RSI may push prices lower.
NZD/USD 4-Hour Chart
Chart created with TradingView
NZD/USD TRADING RESOURCES
— Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwateron Twitter