NZD/USD remains bid, shrugs off slight decline in NZ inflation expectations

• NZD/UD reports moderate gains, holds above 0.70.
• New Zealand inflation expectations drop.

New Zealand's near-term inflation expectations edged down in the second quarter, the Reserve Bank of New Zealand's (RBNZ) quarterly survey of expectations showed.

Reuters report says, "two-year inflation expectations - seen as the time frame when an RBNZ policy action will filter through to prices - slipped to 2.01 percent from 2.11 percent." Meanwhile, the annual inflation is seen averaging 1.8 percent over the coming year, compared to 1.86 percent forecasted in the previous survey.

Despite the slight decline in the inflation expectations, the NZD/USD remains mildly bid above 0.70. The currency pair clocked a session high of 0.7028 earlier today and was last seen trading at 0.7015.

Elsewhere, China reported a trade surplus of CNY 182.8 billion in April, missing the estimate of CNY 189.2 billion.  In USD terms, the trade surplus came in at $28.8 billion vs estimate of $27.75 billion.

So far, the data has not had any impact on the Kiwi. The currency's resilience could be short-lived as the market is currently focused the resulting widening of the yield differential in the USD-positive manner.

NZD/USD Technical Levels

A break below 0.6985 (May 5 low) would open up downside towards 0.6954 (Dec. 12 low) and 0.6945 (Nov, 28 high). On the higher side, breach of resistance at 0.7034 (10-day MA) could yield a corrective rally to 0.7053 (May 4 high) and 0.7096 (April 27 high).