NZD/USD ignores RBNZ’s Convay above 0.6200, China PMI, US inflation data in focus

• NZD/USD fades bounce off two-week low amid sluggish markets.
• RBNZ Chief Economist Convay justifies rate hikes as positive for NZ housing market fundamentals.
• Fears of economic slowdown join anxiety ahead of China’s PMIs, US Core PCE Price Index to exert downside pressure.

NZD/USD struggles to defend the corrective pullback from a fortnight low during Thursday’s Asian session. That said, the Kiwi pair takes rounds to 0.6220 as traders await key data from China and the US, while also showing no major reaction to comments from Reserve Bank of New Zealand (RBNZ) policymaker.

RBNZ Chief Economist Paul Convay defends the New Zealand (NZ) central bank’s hawkish monetary policy as he said, “Policy tightening will likely see actual house prices move back towards sustainable levels more in line with market fundamentals.”

However, RBNZ’s Convay couldn’t impress momentum traders amid the market’s cautious mood ahead of top tier data from China and the US.

That said, the Kiwi pair dropped to a fortnight low during three-day downtrend the previous day as Fed Chair Jerome Powell weighed on the sentiment and propelled the US dollar.

Having failed to react on RBNZ’s Convay, NZD/USD traders await China’s NBS Manufacturing PMI and Non-Manufacturing PMI for June amid fears of recession. Forecasts suggest the headline NBS Manufacturing PMI rise to 50.5 from 49.6 whereas the Non-Manufacturing PMI could also jump to 52.5 versus 47.8 prior. Additionally, the Fed’s preferred version of inflation, namely the Core Personal Consumption Expenditure (PCE) Price Index, for May, expected to rise to 0.4% from 0.3% MoM, will also be important to watch for clear directions.

Technical analysis

Although a seven-week-old horizontal support area surrounding 0.6215-20 restricts immediate downside of the NZD/USD, the pair buyers remain sceptical unless witnessing a clear break of monthly resistance line, near 0.6280 by the press time.