NZD/USD falls as lockdowns in China take toll on APAC region ahead of Australian retail sales

New Zealand Dollar, NZD/USD, China, Australian Retail Sales – Talking Points

  • Asia-Pacific traders watch February retail sales in Australia after a mixed day on Wall Street
  • Covid lockdowns in China’s Shanghai city weigh on risk-sensitive APAC currencies
  • Downside NZD/USD May Continue Below the 200-Day SMA as Bearish MACD Crossover Approaches

Tuesday’s Asia-Pacific Outlook

Market volatility may continue during today’s Asia-Pacific trading session ahead of peace talks between Ukrainian and Russian negotiators. The talks, aimed at a ceasefire, will take place tonight in Istanbul, Turkey. The odds of closing a deal have risen in recent weeks amid a military stalemate, although fierce fighting continues from around Kiev to Mariupol. The risk-prone New Zealand dollar fell overnight as Wall Street indices saw mixed trading.

Traders also sold the Australian dollar against the US dollar. The lockdown in Shanghai China contributed to bearish sentiment in the APAC currencies, given Australia and New Zealand’s economic exposure to China. The tech-heavy CSI 300 index fell more than half a percent in China. Alternatively, technology stocks in the US rebounded after the Nasdaq 100 Index (NDX) rose 1.58% in New York. The underperformance of Chinese stocks could continue until restrictions are reversed or the city comes to grips with the current breakout.

The Japanese yen’s decline continued to spread against the greenback, with the USD/JPY reaching its highest level since August 2015. Japan’s Nikkei 225 index is likely to continue to benefit from the weaker yen, boosting exports and potentially also the import of some much inflation needed. The Bank of Japan’s expansive monetary support continues amid subdued domestic inflation. The BOJ moved earlier this week to keep rising interest rates through purchase assetsannouncing that it will purchase an unlimited number of Japanese government bonds (JGBs).

Today’s economic note draws attention to Australian retail sales in February. The data comes out at 00:30 GMT. Traders expect the preliminary figure to cross the wires at 0.9%, according to a Bloomberg survey. The Aussie dollar is likely to benefit from a better-than-expected figure as it could help fuel already surging rate hikes for the Reserve Bank of Australia (RBA). Elsewhere, Thailand will report new car sales for February, and Singapore will report export and import prices for the same period.

NZD/USD Technical Forecast

NZD/USD fell overnight below the 200-day Simple Moving Average (SMA), with prices approaching Fibonacci’s 23.6% retracement level. The MACD line is also approaching a cross below its signal line, which would generate a bearish signal. A break below 23.6% Fib would open the 20-day SMA for a test. Alternatively, if prices recover, bulls will try to recapture the 200-day SMA.

NZD/USD daily chart

nzdusd diagram

Chart created with Trading Display

— Written by Thomas Westwater, analyst for DailyFX.com

Use the comments below to contact Thomas or @FxWestwater on Twitter

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