NZD/USD rangebound between 0.7200-0.7250 parameters, awaiting broader USD direction

• NZD/USD fell for most of Thursday’s US trading session but still managed to close the session with modest 0.15% gains.
• The pair has been caught between the 0.7200-0.7250 levels over the past two days.

NZD/USD fell for most of Thursday’s US trading session but still managed to close the session with modest 0.15% gains; the pair rallied from lows just above 0.7200 to print highs just to the north of the 0.7250 mark prior to the start of the US session, only to then wane back to the 0.7220s, where the cross continues to trade as the Friday Asia Pacific session gets underway.

Looking at recent price action, NZD/USD has been rangebound, with the gains this week topping out around the 0.7250 mark, whilst it seems that 0.7200 will continue to provide a floor to the price action, as has been the case since the pair broke above this key psychological level at the start of the week. It seems likely that the pair will continue to consolidate within these parameters as long as broader USD conditions remain consolidative; for reference, the US Dollar Index (DXY) has been rangebound between the 90.25 and 90.50 levels over the past two days.

Business PMI

New Zealand Performance of Manufacturing Index (PMI) data for January was just released and beat consensus expectations by a healthy margin, coming in at 57.5 (consensus forecasts were for a 48.2 reading). Thus, New Zealand’s manufacturing sector was seemingly in much better shape than forecast in January given that a Business PMI reading of above 50.0 implies an expansion in economic activity in the sector. This data adds to the string of recent stronger than expected data points out of the New Zealand economy that should contribute to the RBNZ not seeing the need to cut interest rates any further and adopting a cautiously optimistic stance.