NZD/USD again recedes from 0.6700 on RBNZ’s Bascand, China PMI in focus
|- NZD/USD repeats Tuesday’s pullback from 0.6703, the highest since January 03, 2020.
- RBNZ’s Bascand sounds cautiously optimistic while expecting ‘some time’ before full economic recovery.
- US dollar weakness keeps Antipodeans strong against all odds.
- China’s NBS Manufacturing, Non-Manufacturing PMIs to soften in July.
NZD/USD marks another retreat from 0.6700 while easing to 0.6690 amid the early Friday morning in Asia. The kiwi pair recently weighed down by cautious tone of the RBNZ Deputy Governor Geoff Bascand. Though, bulls remain hopeful as the US dollar index (DXY) stays near the 26.5-month low.
RBNZ’s Bascand placates bulls…
The RBNZ policymaker Bascand spoke on the “Banking post-COVID-19” during the initial New Zealand session. The speech focused more on how the kiwi bankers should manage their pockets as the economy edges up from the pandemic. Though, his cautious comments over the pace of the recovery gained major attention of market sceptics.
Read: RBNZ's Bascand: Expects ‘some time' before full economic recovery
Elsewhere, US President Donald Trump’s signals that the long-term shutdown is possible, as well as local lockdowns in the UK, are challenging the market sentiment and pulling the quote backward from the multi-month high. It should also be noted that downbeat comments from the US Secretary of State Mike Pompeo, concerning Iran, offer additional burden on the NZD/USD prices. Furthermore, uncertainty surrounding the US phase 4 fiscal package adds to the pair bulls’ worries.
The quote benefited from the US dollar’s slump the previous day. The greenback had to bear the burden of devastating GDP, -32.9% QoQ versus -5% prior, following the Federal Reserve’s dovish halt of Wednesday. Also negatively affecting the US currency were the rigorously rising coronavirus (COVID-19) cases.
On the contrary, the pandemic’s resurgence in the largest customer Australia and global worries concerning the US fiscal package, not to forget about recovery in macroeconomics, also probe the pair bulls.
It’s worth mentioning that New Zealand’s ANZ-Roy Morgan Consumer Confidence for July slipped from 104.5 prior to 104.3 and offered additional reason to question the pair’s upside move.
Amid all these plays, Wall Street benchmarks flashed mildly negative closing, with Nasdaq being an exception with 0+0.43%, whereas US 10-year Treasury yields revisited the all-time low of 0.536% flashed in March.
Looking forward, China’s July month official Manufacturing and Non-Manufacturing PMI are likely to flash soft numbers and may negatively affect the pair prices. However, any positive surprises will be enough for the pair to challenge the yearly top surrounding 0.6740. Forecasts suggest that Chinese Manufacturing PMI may recede from 50.9 to 50.7 with Non-Manufacturing PMI likely stepping back from 54.4 to 51.2.
Technical analysis
Unless declining below 0.6638, comprising an ascending trend line from June 30, the NZD/USD pair is less likely to stop attacking the yearly top of 0.6741, needless to mention December 31, 2019 high of 0.6756 as the following resistance.
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