NZD/USD clings to NZ retail sales-led recovery gains, 0.69 handle back on sight

The NZD/USD pair was seen building on Friday's tepid recovery move from closer to 10-month lows and has now moved within striking distance of reclaiming the 0.6900 handle.

Currently placed at session tops around 0.6875-80 region, the pair caught some fresh bids after New-Zealand retail sales figures for the first quarter of 2017 surpassed even the most optimistic estimates. The official data released during early Asian session on Monday showed retail sales volumes increased a seasonally adjusted 1.5%, well above 0.6% growth recorded in the previous quarter. Excluding auto, core retail sales also posted a stronger-than-expected growth of 1.2% as compared to 0.7% previous (revised higher from 0.6% reported earlier).

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Meanwhile, traders seemed to have largely ignored a slight disappointing Chinese economic data - industrial production, fixed asset investment and retail sales, while a subdued US Dollar price-action supporting the bid tone surrounding the major.

Market also looked beyond RBNZ assistant governor McDermott's comments that uncertainty still remains high and hence, OCR should remain stable in the near-future. 

Later during the NA session, the release of Empire State Manufacturing Index from the US would now be looked upon for some fresh impetus. In the meantime, broader market risk-sentiment and the USD price-dynamics would continue to be key determinants of the pair's movement on the first trading day of a new week.

Technical levels to watch

Sustained momentum beyond the 0.6900 handle has the potential to lift the pair towards 0.6930 horizontal resistance ahead of 50-day SMA important hurdle near 0.6960-65 region.

On the downside, 0.6855-50 region now becomes immediate support to defend, which if broken would turn the pair vulnerable to head back towards retesting multi-month lows support near 0.6820-15 area.