US Consumer Confidence

In the US, the University of Michigan Consumer Sentiment Index fell to 50.8 in May from 52.2, signaling declining consumer confidence. Earlier PPI and retail sales data pointed to disinflation and slower growth. Although the Federal Reserve indicates easing, uncertainties such as tariff adjustments maintain USD demand.

Technically, NZD/USD presents a bearish structure despite the recent rise. Trading within a range of 0.5865 and 0.5918, indicators like RSI and MACD show neutral to bearish signals. Resistance is expected at 0.5880 and 0.5883, with support at 0.5861, 0.5847, and 0.5827. Without new economic catalysts, breaking above current levels may be challenging.

With the NZD/USD pair hovering around 0.5890, there’s been a short-term bounce following a decent stretch of selling pressure. This small push higher was helped by local data out of New Zealand showing some strength—both in manufacturing and forward-looking inflation expectations. While global sentiment has largely turned cautious again, the Kiwi has held firm, somewhat counterintuitively outperforming several of its peers in the G10. This is not without merit, given recent onshore signals.

Market Positioning And The RBNZ

The April reading for the manufacturing index (PMI) showed the sector growing at a slightly faster pace, touching 53.9 versus the previous 53.2. That’s a decent trend for those watching domestic productivity. Perhaps more relevant, however, is the Reserve Bank’s updated inflation expectations survey, which points to a 2.3% rise over the next two years. That’s just above the midpoint of the central bank’s target range and could make upcoming monetary decisions less clear-cut.

Markets have largely been positioned for interest rate reductions from the RBNZ in the near term, potentially starting within the month. However, with prior cuts already priced in, any stickiness in inflation—not just headline but expectations—creates room for the central bank to delay or reconsider the pace of any softening. We’ll need to see how June CPI indicators shape out.

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