NZD/USD recovers further beyond 0.72 handle

The NZD/USD pair traded with positive bias through Asian session on Friday and recovered part of previous session's losses led by disappointing NZ GDP report. 

The pair on Thursday came under intense selling pressure after lower-than-expected NZ quarterly GDP growth for the first quarter of 2017. This coupled with the hawkish Fed, helping the US Dollar to recover sharply from yearly lows, further collaborated to the pair's sharp retracement from fourth month highs touched on Wednesday. 

The selling pressure aggravated during early NA session on Thursday after a trio of better-than-expected US economic data - weekly jobless claims and regional manufacturing indices - Empire State and Philly Fed. 

The selling pressure seems to have abated, at least for the time being, and the pair has now recovered back above the 0.7200 handle. An up-tick in Business NZ Manufacturing Index might have prompted some short-covering move from near-term oversold conditions. 

It, however, remains to be seen if the pair is able to build on the recovery move amid a follow through pick-up in the US Treasury bond yields, which usually tends to weigh on higher-yielding currencies - like the Kiwi.

Today's US economic docket features the release of housing market data - building permits and housing starts, along with the preliminary release of UoM Consumer Sentiment Index for June, and might provide some short-term trading impetus later during the NA session. 

With market already seems to have digested softer NZ GDP print, the pair seems more likely to enter a consolidation phase as focus now shift to next week's RBNZ monetary policy decision on Thursday. 

   •  RTRS Poll: RBNZ seen holding cash rate at 1.75% next week

Technical levels to watch

A follow through recovery beyond 0.7220-25 area, the pair seems to aim back towards 0.7260-65 resistance area before eventually darting back towards the 0.7300 handle. On the flip side, sustained weakness back below the 0.7200 mark is likely to accelerate the slide towards weekly lows support near 0.7170 level en-route 0.7145-40 strong horizontal support.