NZD/USD : HARMONICS ANALYSIS + FUNDAMENTALS | SHORT VIEW

Mar 7, 2022

NZD/USD eyes to fill day-start gap to the south, posted the biggest weekly jump since October 2021.
Markets sentiment remains sour as Russian invasion of Ukraine continues, US eyes banning oil & gas import from Moscow.
Upbeat prices of commodities help Kiwi to battle firmer greenback, US jobs report came in upbeat for February.
No major data/events on the calendar, geopolitical headlines to keep the driver’s seat.
NZD/USD bulls poked January’s high during the five-week uptrend by the end of Friday, picking up bids to fill the week-start trading gap around 0.6850 amid early Monday morning in Asia.

The Kiwi pair’s latest gains could be linked to the increasing price pressure and the Reserve Bank of New Zealand’s (RBNZ) hawkish performance. On the contrary, the market’s rush to the US dollar, in search of risk-safety due to the Russia-Ukraine crisis, tests the pair buyers.

While observing major central banks, the Fed and the RBNZ are the only two that are clearer in their future moves and have more hawkish signals to spread than any other counterparts, which in turn keeps the NZD/USD bulls hopeful. On the same line are statements from the ANZ saying, “Although the most striking gains have been seen in oil, food commodity prices are following, and that’s seen both the NZD and AUD diverge from EUR and GBP, which have suffered in the face of apparent USD strength.”

Elsewhere, the evacuation of Ukrainian civilians is jittery during the weekend as Russian forces kept marching towards Kyiv. Recently, the Moscow-led militaries blew an airport in central Ukraine while Friday’s threat over nuclear facilities was the biggest. The West tries to tame Moscow’s moves with more sanctions with the latest discussions on banning energy imports. However, Russian President Vladimir Putin remains determined to complete the “operation” and demands Ukraine’s complete surrender for peace.

It’s worth noting that Friday’s upbeat US jobs report for February and comments favoring future rate increases by the Fed, from Chicago Fed President and FOMC member Charles Evans, added to the US dollar’s strength.

Amid these plays, Wall Street closed in the red and the US 10-year Treasury yields also posted the biggest weekly loss since mid-2020.

Looking forward, this week’s US inflation data will be crucial to watch amid a light calendar and silent period for the Fed speakers. Above all, headlines concerning Russia and Ukraine will be crucial.