NZD/USD pulls back to 0.6560 despite upbeat NZ Q3 Manufacturing Sales
|- NZD/USD consolidates gains from a multi-month high.
- New Zealand’s Q3 Manufacturing Sales recover more than expected.
- US-China trade war the in spotlight amid an absence of the key data/events.
NZD/USD pulls back from the four-month high to 0.6560 during the early Asian session on Monday.
New Zealand’s (NZ) third quarter (Q3) Manufacturing Sales recovered to -0.3% versus -0.8% forecast and -2.7% prior. The data could not please Kiwi traders after headlines from China signaled trade tension to prevail. Also, this becomes the second consecutive decline of the manufacturing sales and damage the optimism at home.
The recent weakness could be due to China’s action after a recovery in import numbers. China’s November month data suggested a heavy drop in Exports but a first since April rise in Imports. After China, the Financial Times (FT) ran a story that Beijing orders government offices to remove foreign computers and software during the time period of three-years and rely more on domestic technology. This spoils the mood ahead of the scheduled tariffs from the United States (US), up on December 15. Further, China’s Global Times (GT) also showed less reliance on the US as imports recover despite trade tussle.
The Kiwi pair has been rising off-late as markets anticipate a monetary policy divergence between the central banks of New Zealand and Australia. The Reserve Bank of New Zealand’s (RBNZ) latest statements has been turning down the need of using unconventional monetary policy tools while also praising its surprise action of 0.5% rate cut announced mid-year.
This could be attributed to the pair’s run-up despite Friday’s upbeat employment and consumer sentiment data from the US. The US Nonfarm Payrolls (NFP) rose surprisingly to 266K while the Unemployment Rate dropped to the lowest since 1969 during November.
Looking forward, an absence of major data/events will keep traders focused on the trade/political headlines, off-shore catalysts for fresh impulse.
Technical Analysis
Buyers look for entry beyond August month high, near 0.6590, whereas a downside break below 200-day Simple Moving Average (SMA), near 0.6535, will trigger fresh declines.
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