NZD/USD drops below 0.6200 amid holiday in New Zealand, China data eyed
|- NZD/USD weighs down by the fresh escalation of the US-China tension.
- Sino-American tussle intensifies despite no fresh sanctions on the Asian major by US President Trump on Friday.
- China’s NBS Manufacturing PMI flashed soft figures, Caixin PMIs in focus.
NZD/USD extends late-Friday pullback from 0.6214 towards flashing the intraday low of 0.6186, currently around 0.6190, during the initial Asian session on Monday. While US President Donald Trump’s refrain from announcing fresh sanctions on China seemed to have helped Kiwi pair during the late-last week, the recent weakness in the quote could be traced to the escalating tussle between the US and China.
US and China stay at loggerheads…
Although Friday’s China conference by US President Trump paved the way for diplomatic relations between the world’s top two economies, the recent developments suggest nothing has changed amid them.
The South China Morning Post (SCMP) cited, based on the clues from an anonymous government adviser, the dominance of Chinese groups calling for more ‘fighting spirit’ over the moderates supporting the dialogue and cooperation to suggest that the US-China tension is set to worsen.
US Secretary of State, Mike Pompeo, also added to the worries while stating that the Chinese Communist Party’s military advances are real. The Trump administration member also said that President Trump will always keep us in a position where we can protect the American people. Furthermore, the US diplomat additionally mentioned that this is a Chinese communist party that has come to view itself as intent upon the destruction of western ideas, western democracies, and western values.
Other than the fears of the US-China tussle, the kiwi pair might also have taken clues from China’s NBS Manufacturing PMI for May. The official manufacturing activity gauge from the dragon nation dropped to 50.6 versus 50.8 prior and 51.00 forecasts in May.
Traders are now waiting for China’s Caixin Manufacturing PMI for May, expected 49.6 versus 49.4 prior, for fresh impulse. However, the US-China story will keep the markets active.
Technical analysis
Unless providing a clear break above May month high of 0.6241, sellers keep eyes on the downside break below 100-day SMA level of 0.6188 to revisit May 11 top near 0.6155. However, the pair’s further weakness past-0.6155 could recall sub-0.6100 on the chart.
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