NZD/USD supported at 0.7265 ahead of NZ PMI

• Possible Fed hike next week, US data and Kudlow boost the USD.
• New Zealand Business PMI scheduled at 21.30 GMT.

The NZD/USD is trading at around 0.7275 down 0.77% as the dollar kept climbing on Thursday as data showed that U.S. import prices increased more than forecasted in February. The dollar accelerated higher after the Labor Department announced that import prices increased 0.4% in February, compared to forecasts of 0.2%. Exacerbating the move was also Kudlow, the newly appointed White House economist, jawboning about the dollar and urging people to sell gold in favor of the greenback, earlier in the US session. 

Coming up next at 21.30 GMT is the business New Zealand PMI for March. Last data showed 55.6. 

According to ING a Fed hike next week is most likely fully priced in by the market and the question becomes whether 2018 will see three or four rate hikes. 

“Back in December, only four out of 16 Fed members expected four hikes in 2018, so arithmetically it will take another four or five to join this camp for the median dot to move upwards. Whatever happens, with core inflation on the verge of returning to target and the economy continuing to perform strongly, we think the Fed will ultimately follow through with four rate rises this year.” According to Carsten Brzeski, Chief Economist at ING. 

However, earlier in the week, protectionism measures put pressure on the greenback, as Trump considered imposing tariffs on up to 60b USD of Chinese imports after imposing steep import tariffs on steel and aluminum last week. 

New Zealand GDP disappointed on Wednesday and the market was keen to sell the NZD as an immediate reaction. The NZD/USD remained well under pressure this Thursday. 

NZD/USD 1-hour chart

Immediate support is seen at 0.7265, the 50% Fibonacci retracement from the March 1-13 up leg. The Kiwi is now trading below its 100 and 200 SMAs (1-hour). With such a dramatic move down, it is likely that the pair will consolidate, however, it remains vulnerable to further downside and 0.7250 last swing low and 50% Fibonacci retracement is likely the next scaling point if reached. A corrective move should lift the market to 0.7290, 200 SMA and 38.2 Fibo, followed by 0.7320, 100 SMA and 23.66 Fibo. According to United Overseas Bank, the 0.7265 level should be a strong support level. Read the article here.