NZD/USD bears looking for opportunity to capitalise on trade-deal headlines
|- NZD/USD is pulling back on the lack of details in the trad-deal news.
- NZD/USD will be paying attention to key domestic date in GDP and trade balance.
NZD/USD is starting out the week below the 0.66 handle following a pullback on Friday as market hysteria over the phase -one deal dissipates considering the lack of encouraging details that accompanies the headline. NZD/USD is trading at 0.6589 between a narrow range in a quiet session, so far, of between 0.6587 and 0.6601.
On Friday, the kiwi lost its traction due to the void detail around the US-China trade deal disappointed markets. The currency had earlier enjoyed a reasonable amount of lift, leading its commodity-linked peers against the USD, but ultimately collapsed into the red with its peers. Trade headlines will remain a driver but the domestic focus will be on NZ Q3 GDP. In recent trade, the New Zealand Institute of Economic Research has downgraded their Gross Domestic Produce outlook which is weighing on the kiwi and capping bullish attempts. The GDP growth outlook was revised down at 2.2% from the previous survey at 2.3%.
Robert Lighthizer attempts to bullish-up the trade deal headlines
Meanwhile, trade headlines will continue to be a focus. Both and Chinese officials announced on Friday that a deal they finally agreed to the phase one agreement after a contentious 18-month trade war. However, details are still murky and traders are looking for something more to go on, for now, it appears there is little which the US is getting from agreements that have been made in principle. Over the weekend, US lead negotiator, Robert Lighthizer, was speaking on CBS Lighthizer and said that the phase one US/China trade deal reached on Friday was “totally done,” and it will nearly double US exports to China over the next two years.
Key comments
“There’s a translation period. There are some scrubs, this is totally done. Absolutely."
“We have a list that will go manufacturing, agriculture, services, energy and the like. There’ll be a total for each one of those,” he said. “Overall, it’s a minimum of 200 billion dollars. Keep in mind, by the second year, we will just about double exports of goods to China, if this agreement is in place. Double exports.”
“But ultimately, whether this whole agreement works is going to be determined by who’s making the decisions in China, not in the United States,” Lighthizer said. “If the hardliners are making the decisions, we’re going to get one outcome. If the reformers are making the decisions, which is what we hope, then we’re going to get another outcome.”
Looking ahead for the week, the immediate US data calendar is second-tier but still worth noting with the December Empire State manufacturing survey from the NY Fed that is expected to show a modest +4 vs +2.9 in November while the NAHB housing market index is seen holding at a firm 70 in December. For New Zealand, GDP and the Trade Balance will be the key focus.
NZD/USD levels
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