I'm not able to create files from a floating Navigation Bar

I typically have Appearance > Navigation Bar disabled. This means that when I press Cmd+Up, a floating navigation bar appears.

I used to be able to navigate to a directory of my choice and hit Cmd+N to launch the New File popup. This has stopped working in the last couple of months.

It still works fine if I use the fixed position Navigation Bar. Have I done something wrong in the settings?