NZD: Asia Wrap - NZD/USD Has A Look Below 0.6000

The NZD/USD had a range of 0.5983 - 0.6041 in the Asia-Pac session, going into the London open trading around 0.5995, -0.55%. The NZD has had a decent move lower in our session as risk turns lower with the potential entry of the U.S. into the Middle East conflict. Price has broken below its recent 0.6000 support and would have triggered any stops lingering just below that level. It feels like the market is waiting for confirmation of the US military committing itself to the war effort before deciding how to deploy risk. In that scenario can the NZD follow through on this break below 0.6000 before we have that information ?

• NEW ZEALAND: Q1 Growth Materially Stronger Than RBNZ Forecast. Q1 NZ production-based GDP was stronger than expected rising 0.8% q/q resulting in the annual rate falling 0.7% y/y but up from the downwardly-revised -1.3% in Q4. Expenditure GDP rose 0.9% q/q, the fastest since Q2 2023, to be down 0.2% y/y after -1.1% in Q4. Growth in Q1 was fairly broad based and substantially above the RBNZ’s May forecast. While it is backward-looking data, it may allow the central bank to pause in July especially given the pickup in inflation.
• (Bloomberg) -- “Citi pushes back its forecast for an RBNZ interest rate cut to August 20 from July 9, citing better-than-expected GDP figures and the stance taken by Governor Christian Hawkesby last month. “
• The NZD is attempting to break back below the 0.6000 area, a sustained break back below here and we could see a deeper pullback towards 0.5850 so watch to see if NZD/USD can reclaim 0.6000 in the overnight session.
• Technically while the support around 0.5850 holds in NZD/USD there should be buyers around on dips towards this area. A clear sustained break above 0.6050/0.6100 is needed for the pair to get momentum to push higher.
• Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5830(NZD300m June 23), 0.5755(NZD300m June20)
• AUD/NZD range for the session has been 1.0788 - 1.0828, currently trading 1.0820. The cross has broken the multiple tops around 1.0800, if price can hold this break it would put a higher low in place on the Daily chart, and focus will return to the more important 1.0900 area once more.

Fig 1: NZD/USD Spot Hourly Chart

Source: MNI - Market News/Bloomberg Finance L.P