NZD/USD struggles near 0.6150 amid downbeat NZ trade numbers, bank fears
- NZD/USD licks its wounds as risk aversion joins downbeat New Zealand trade numbers for March.
- First Republican Bank renews banking fears even as major central banks cut USD operations to show confidence.
- Fears of recession, uncertainty surrounding the Fed’s next move also weigh on the Kiwi pair.
- RBNZ’s proposal to ease LVR restrictions defends Kiwi buyers ahead of US Durable Goods Orders.
NZD/USD seesaws around mid-0.6100s as it consolidates the previous day’s losses during early Wednesday morning in the Asia-Pacific zone. In doing so, the Kiwi pair fails to justify the downbeat New Zealand (NZ) trade numbers, as well as broad US Dollar strength amid risk-off mood ahead of the key US Durable Goods Orders for March.
That said, NZ Trade Balance dropped to $-1,273M versus $-796M prior (revised) while the annual trade deficit rose to $16.4B versus $-15.72B prior figures (revised from $-15.64B). Further details suggest that Exports rose to $6.51B during the said month versus $5.06B (revised) prior whereas Imports increased to $7.78B compared to $5.86B previous readings.
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Earlier in the day, the Reserve Bank of New Zealand (RBNZ) came out with an updates suggesting easy Loan-To-Value Ratio (LVR) restrictions, which in turn allowed the NZD/USD to pare the previous day’s losses.
"Our assessment is that the risks to financial stability posed by high-LVR lending have reduced to a level where the current restrictions may be unnecessarily reducing efficiency," said RBNZ Deputy Governor Christian Hawksby.
Above all, the First Republic Bank’s (FRB) disappointing earnings reports joined the executives’ resistance in taking questions and no earnings guidance to trigger the fresh wave of banking jitters and weighed on the market sentiment the previous day, which in turn drowned NZD/USD. It’s worth noting that the major central banks tried to restore the market confidence but could not. “The world's top central banks are cutting the frequency of their dollar liquidity operations with the U.S. Federal Reserve from May, sending the clearest signal yet that last month's financial market volatility is essentially over,” said Reuters.
On the same line could be the fears of US debt ceiling expiration as US Treasury Secretary Janet Yellen warned that failure by Congress to raise the government's debt ceiling - and the resulting default - would trigger an "economic catastrophe" that would send interest rates higher for years to come, per Reuters.
Looking forward, US Durable Goods Orders for March will be important to watch as it offers clues for Thursday’s US Gross Domestic Product (GDP) for the first quarter (Q1).
Technical analysis
A sustained trading below the 200-DMA hurdle, around 0.6165 by the press time, keeps NZD/USD bears hopeful of refreshing the yearly low, currently around 0.6085 at the latest.