NZD/USD eases below 0.6650, turns negative on the day
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- The New Zealand dollar retreats below 0.6650 and turns negative on the day.
- The kiwi fails to capitalize on upbeat NZ and Chinese data.
- NZD/USD seen at 1.6500 in 1 to 3 months – Rabobank.
The New Zealand dollar has retreated further during the late US session on Tuesday, consolidating below 0.6650 and turning negative for the second consecutive day. The kiwi was unable to maintain the positive tone seen during the Asian session and has given in gains against a stronger greenback as market sentiment deteriorated.
The NZD trades lower despite upbeat macroeconomic data
Electronic Card Retail Sales rose 5.4% in New Zealand last month, after an 8.9% decline in August, while China reported a 13.2% increase on imports in September, which offered a fresh impulse to the kiwi. The positive reaction, however, was short-lived, as the pair pulled back during the European session, with the US dollar gaining traction amid a risk-averse sentiment.
News about Jonson & Jonson’s decision to pause their COVID-19 study has dampened an already fragile mood. The rejection of Trump’s stimulus proposal and the lack of progress on the Brexit negotiations in Europe have contributed to depress market sentiment which has sent the US dollar higher across the board.
NZD/USD aiming to 0.65 in 1 to 3 months – Rabobank
From a wider perspective, the FX strategy team at Rabobank sees the pair depreciating towards 0.6500 over the next months: “Given the second wave of covid-19 underway in Europe and parts of the US, it is likely that border restriction will remain in place for some time yet. In view of the RBNZ dovish policy stance, we see USD/NZD at 0.65 on a 1 to 3-month view.”
Technical levels to watch
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