The NZD/USD currency pair has recovered from its intraday low and is now trading near 0.6250 on Thursday morning. After a multi-day high, the US dollar may be on the upswing.
In 2026, according to the New Zealand Treasury, there will be no recession and a budget surplus. “Recent widening of current account deficit expected to reverse,” Grant Robertson, New Zealand’s finance minister, said when he unveiled the country’s annual budget.
Buyers of the US Dollar Index (DXY) have been having difficulty keeping it at its highest level in seven weeks (about 102.85-80 as of this writing). Recent passivity in the US dollar may be explained by the looming deadline for the US debt ceiling in early June and concern surrounding the ability of US officials to reach a settlement on various subjects to fix the debt-limit dilemma.
Recent strength in the US dollar can be attributed to strong US economic data and hawkish comments from the Federal Reserve.
In an interview with CNBC on Wednesday, House Speaker Kevin McCarthy said, “Now we have an opportunity to find common ground but only a few days to get the job done.” President Joe Biden reportedly told Reuters that a budget solution will be reached and that he agrees that failing to pay bills would be terrible. Vice President Joe Biden of the United States announced on Sunday that he “will have a debt news conference.”
The revised figure of 1.371 million for March was also lower than the original estimate of 1.4 million for April. Permits to construct buildings decreased from the previous month to 1.416M, which was lower than expected. Before that, Fed officials were hawkish and risk-taking after April’s numbers for US retail sales and industrial production. The presidents of the Federal Reserve Banks of Chicago and Atlanta confirmed inflation worries and support for selling New Zealand dollars.
Input and output on the New Zealand Producer Price Index fell to 0.2% and 0.3% from 0.5% and 0.9% in Q1. Both input and output are much below market expectations of 1.5% and 1.3%, respectively.
S&P 500 Futures fall despite Wall Street’s positive closing as US Treasury bond rates hover near their multi-day high. Rates on US 10-year and 2-year Treasury bonds have dropped to 3.55% and 4.13%, respectively, from levels of 3.57% and 4.16% during the past four days.
Trade Idea
Consider shorting NZD/USD near 0.6250 with a target of 0.6200. Watch for sustained USD strength amid US debt ceiling concerns and NZ economic indicators.