NZD/USD stays pressured near 0.7000 after three-week downtrend on firmer USD
|- NZD/USD bears refrain from easing controls after three-week downtrend.
- Fed tapering chatters, China’s Evergrade woes join US debt limit expiry fears to underpin US dollar’s safe-haven demand.
- Lack of key catalysts ahead of next week’s RBNZ, virus woes at home also favor sellers.
- Risk catalysts keep the driver’s seat amid a light calendar.
NZD/USD sellers flirt with the 0.700 threshold as they begin the week’s task during early Monday morning in Asia. This keeps the kiwi pair in the vicinity of the bears after posting a three-week south-run amid broad US dollar strength.
Be it the US Federal Reserve’s (Fed) tapering hints, backed by Friday’s Fedspeak, or fears of China’s Evergrande, not to forget anxiety over US budget allocations and debt ceiling near the expiry, everything helps the King Dollar to keep the throne due to its risk-safety status.
Having heard the much-awaited tapering hints from the Fed, the US central bank officials, namely Cleveland Fed President Loretta Mester and Kansas City Fed President Esther George, back the consolidation of asset purchases. Fed Chair Jerome Powell spoke for supply chain issues and labor market shortages on the other hand.
China’s Evergrande is a fireball problem for the Dragon nation despite the government and People’s Bank of China (PBOC) trying to safeguard the monetary policy. Fears emanating from the real-estate giant have recently started hurting the power sector and hints at a major challenge for Beijing.
Elsewhere, US policymakers do push for the $3.5 trillion stimulus, as well as the debt limit, but nothing concrete has been rolled out. As the latest funding expiry before October 01 comes closer, anxious traders seek solace in the USD.
At home, the Reserve Bank of New Zealand (RBNZ) is widely anticipated to hike the benchmark rate during the next week’s monetary policy meeting. However, challenges from China and relating to the coronavirus-led local lockdowns, which remain present with lighter controls, keep NZD/USD traders on their toes.
Despite the aforementioned challenges to the risk appetite, equities manage to stay firmer on Friday while the US 10-year Treasury yields refreshed three-month top while piercing the 1.45% mark.
Looking forward, NZD/USD may remain depressed amid the gamut of challenges to the market sentiment and a light calendar for the day. However, US Durable Goods Orders for August, expected +0.6% versus -0.1%, may entertain traders.
Read: US Durable Goods Orders August Preview: Retail Sales have led the way
Technical analysis
Unless crossing a convergence of 200-SMA and a seven-month-old resistance line, around 0.7115-20, NZD/USD is likely to retest March’s low surrounding 0.6945.
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