NZD/USD recovers toward 0.6570 as US Dollar turns flat on the day
|- US Dollar Index finds resistance at 97, retraces daily gains.
- Retail sales in the U.S. beat expectations in July.
- USD/CNY stabilizes near 6.9350.
The combination of a strong USD and a weak CNY on Wednesday pulled the NZD/USD pair to its lowest level in nearly 30 months at 0.6543. With the greenback struggling to preserve its bullish momentum in the NA session, the pair started to retrace its losses and was last seen trading at 0.6567, where it was still down 0.13% on the day.
Earlier today, the kiwi came under pressure as the Chinese yuan weakened against the USD, lifting the USD/CNY pair to its highest level since January of 2017 and bringing it dangerously close to its record high of 6.9650. At the moment, the pair seems to have stabilized with at 0.75% daily gain at 6.9350, allowing the NZD to show some resilience against the buck.
On the other hand, the US Dollar Index extended its daily gains to a fresh 13-month high at 97 after the monthly data released by the U.S. Bureau of Labor Statistics revealed that retail sales in July rose 0.5% in July compared to experts' estimate of 0.1%. Furthermore, the NY Fed's Manufacturing Index advanced to 25.6 in August from 22.6 in July. However, the fact that capacity utilization and industrial production figures both came in below the market consensus forced the DXY to start erasing its gains. In the meantime, the weak market sentiment in the session weighed on the T-bond yields and put some extra weight on the USD's shoulders. At the moment, the index is virtually unchanged on the day near 96.70.
There won't be any macroeconomic data releases from New Zealand on Thursday, but investors will be watching the employment report from Australia. A sharp reaction by the AUD/USD pair to the data could impact the positively-correlated NZD/USD's price action.
Technical outlook
The initial support for the pair could be seen at 0.6540 (daily low) ahead of 0.6500 (psychological level) and 0.6460 (Feb. 2, 2016, low). On the upside, resistances are located at 0.6600/10 (psychological level/Aug. 14 high), 0.6690 (Aug. 9 high) and 0.6765 (50-DMA).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.