NZD/USD: Steady below 0.6600 as sellers catch a breath after three-day losing streak
- NZD/USD seesaws near the one-week low, await fresh clues after multi-day declines.
- Broad US dollar strength, risk aversion dragged commodity-linked currencies before New Zealand GDT Price Index.
- A light economic calendar emphasizes on news flow for fresh direction.
NZD/USD remains modestly changed around 0.6595 amid the early Wednesday morning in Asia. The kiwi pair dropped for three days in a row by the end of Tuesday. However, the latest New Zealand GDT Price Index and the absence of major data ahead pushed sellers to rethink their view.
The bi-monthly GDT Price Index from New Zealand recently crossed -0.3% forecast with a gain of +1.7%. Details suggest that the Whole Milk Powder (WMP), the key component, also pleased dairy members while marking 2.4% gains.
Earlier, risk aversion welcomed the US dollar while returning from an extended weekend. News of China’s coronavirus outbreak, US President Donald Trump’s impeachment hearing and the International Monetary Fund’s (IMF) downwardly revised global growth forecasts mainly contributed to the market’s risk-off mood on Tuesday.
With this, the US 10-year treasury yields lost more than six basis points (bps) to 1.77% while the S&P 500 Futures also mark 0.15% loss to 3,320 by the press time.
Also contributing to the greenback’s strength were upbeat comments from US President Trump and White House Advise Larry Kudlow from the World Economic Forum (WEF) in Davos.
On the trade front, China’s Commerce Ministry reiterated its call to welcome competitive US products whereas US President Trump considered Beijing’s import promise as huge.
An absence of major data/catalysts could keep markets focused on the trade/political headlines for fresh impulse. “NZ rates will be dominated by offshore moves today with risk-off on the back of the Coronavirus headlines. We still favor USD upside near term given the likelihood that US growth expectations will be revised up for 2020 H1 (first half),” said the Australia and New Zealand Banking Group (ANZ).
Technical Analysis
A 50-day SMA level of 0.6570 and December 18 low near 0.6555 can restrict the pair’s immediate declines while the monthly trend line and 21-day SMA, around 0.6635 and 0.6650 respectively, can question buyers during the recovery.