• NZD/USD grinds near weekly high, lacks upside momentum despite firmer Q2 Business Confidence.
• NZIER Business Confidence improves to -63.0% in Q2 but Capacity Utilization deteriorates.
• Softer US Dollar defends Kiwi buyers but pre-RBA anxiety seems to prod traders.
• RBA can offer notable volatility but US holiday will restrict the moves afterward.

NZD/USD remains sidelined near 0.6150 despite upbeat business confidence from New Zealand, after refreshing a one-week high around 0.6170, as market players await the key Reserve Bank of Australia (RBA) decision amid early Tuesday. Apart from the pre-RBA anxiety, the US Independence Day holiday also restricts the Kiwi pair’s reaction to the data.

That said, the New Zealand Institute of Economic Research's (NZIER) quarterly survey of business opinion (QSBO), mostly known as NZIER Business Confidence, improved in the second quarter to -63.0% versus -66.0% prior. The reason could be linked to the deterioration in the Capacity Utilization data, down to 81.7% versus 94.0% prior.

It’s worth noting that upbeat New Zealand Building Permits and risk-on mood joined hawkish hopes from the RBA to propel the NZD/USD price on Monday. That said, the NZ Building Permits improved to -2.2% MoM for May from -2.6% prior.

Apart from that, the downbeat US data and hopes of an improvement in the US-China ties also underpinned the NZD/USD run-up the previous day.

On Monday, US ISM Manufacturing PMI for June dropped to the lowest level in three years, as well as stayed below the 50.0 level for the seventh consecutive month, as it marked a 46.0 figure versus 47.2 expected and 46.9 prior. Further, S&P Global Manufacturing PMI for June confirmed 46.3 figures, the lowest in five months, whereas the Construction Spending improved 0.9% MoM for May, versus 0.5% expected and 0.4% previous readouts.

Amid these plays, Wall Street closed on the positive side and the yields grind higher while the US Dollar Index (DXY) dropped for the second consecutive day.

Moving on, NZD/USD traders should pay attention to the RBA details and risk catalysts for clear directions amid the US holiday. Markets expect the RBA to keep the rates unchanged after two consecutive hawkish surprises and due to the softer inflation data. However, there is a thin line among the hawks expecting RBA’s 0.25% rate hike and no rate change, making the event more interesting.