FxWirePro: NZD/USD advances as hawkish outlook by a top policy maker boosts kiwi dollar

NZD/USD firmed on Tuesday as New Zealand dollar attracted bids after the RBNZ reiterated concerns that inflation could prove more persistent than previously anticipated. RBNZ Chief Economist Paul Conway warned that...

• NZD/USD firmed on Tuesday as New Zealand dollar attracted bids after the RBNZ reiterated concerns that inflation could prove more persistent than previously anticipated. • RBNZ Chief Economist Paul Conway warned that higher global oil prices could lift inflation expectations, increasing the likelihood that underlying price pressures remain elevated.

• Paul Conway comments reinforced expectations that New Zealand's central bank may maintain a tighter policy stance for longer than expected. • The central bank's Monetary Policy Committee last week raised its official cash rate by 25 basis points to 2.5%, the first hike in three years, as it sought to reduce policy stimulus in the face of rising inflation.. • On the data front, New Zealand's business confidence rose in the second quarter as fuel prices fell and the fuel crisis eased, a private think tank said on Tuesday.

• A net 8% of New Zealand firms expect business conditions to improve, up from a net 4% pessimism in the previous quarter, according to the NZIER's Quarterly Survey of Business Opinion (QSBO). • Immediate resistance is located at 0.5813(Higher BB), any close above will push the pair towards 0.5840(50%fib).

• Support is seen at 0.5764(38.2%fib) and break below could take the pair towards 0.5713(SMA20). Recommendation: Good to sell around 0.5850 with stop loss of 0.5900 and target price of 0.5800