NZD/USD retreats below 0.64 as focus shifts to US data
|- Business activity in the manufacturing sector continues to contracts in New Zealand.
- Retail Sales in the US is expected to increase by 0.2% in August.
- US Dollar Index extends slide, tests 98 handle.
The NZD/USD pair rose to its highest level in four weeks at 0.6450 on Thursday but failed to close the day in the positive territory. Pressured by the uninspiring data, the NZD struggled to take advantage of the latest headlines surrounding the US-China trade conflict and dropped below the 0.64 mark. As of writing, the pair was down 0.2% on a daily basis at 0.6390.
Kiwi struggles to attract investors
Earlier today, the Business NZ PMI data improved to 48.4 in August from 48.1 in July but stayed below 50 to show contraction in the economic activity in the manufacturing sector for the second straight month. Assessing the publication's details, "Four of the five sub indexes were below 50. New orders dropped to 45.6, the lowest in 10yrs. One bright spot in the sub-component was employment which rose 7 points m/m to 49.3,” said TD Securities analysts.
Meanwhile, China’s State Council on Friday said that they will be excluding some agricultural products including soybeans and pork from additional tariffs on US imports. Furthermore, US President Trump said that he would prefer to have a full trade deal with China rather than an interim one. These developments helped the selling pressure on the trade-sensitive NZD ease modestly.
On the other hand, the US Dollar Index (DXY) stays in the negative territory near the 98 handle ahead of the Retail Sales and Consumer Confidence data from the US. However, the DXY's sharp fall since yesterday reflects the strong demand for major European currencies rather than a fundamentally weaker USD.
Technical levels to watch for
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