NZD/USD: Under pressure around 0.6550 ahead of China inflation data

• NZD/USD extends the week-start pullback from the multi-month high.
• Recently published NZ ANZ Truckometer signal impressive annual GDP.
• Trade tension, cautious sentiment ahead of the key events keep bulls in check.

NZD/USD drops to 0.6550 at the start of Tuesday’s Asia session. The Kiwi pair stays on the back foot with the latest second-tier traffic data indicating a soft growth figure. Further, trade tension and the market’s lack of activity ahead of the key events keep the pair under pressure since the week’s start.

The Australia and New Zealand Banking Group (ANZ) recently came out with their monthly New Zealand (NZ) Truckometer data for November. The release suggested that the Heavy Traffic Index dropped -1.5% versus +2.5% prior while Light Traffic Index rose 2.1% following 0.3% earlier. The data is considered to have a strong impact on the Gross Domestic Product (GDP). After the data release, the ANZ said, “Annual growth in both indexes is lifting off low levels. It suggests annual GDP growth is going to continue to be unimpressive for a while yet. But things are looking better in a momentum sense.”

On the trade front, comments from the United States (US) President Donald Trump and China’s Assistant Commerce Minister signaled all going well as far as the phase-one talks between the US and China are concerned. Even so, traders showed a less positive reaction to the news as those words are repetitive and have failed to generate any results so far. Also, the US President Trump’s attempt to block the funds for China, via World Bank, coupled with Beijing orders to stop using foreign computers and software in the government offices kept the risk tone compressed. It’s worth mentioning that China’s return to the US Soy markets after tariff waivers keep the hope of a deal before the US tariff deadline on December 15 triggers.

With this, the US 10-year treasury yields stay on the back foot around 1.82% while the S&P 500 Futures declines 0.37% to 3,134 by the press time.

Moving on, China’s November month Consumer Price Index (CPI) and Producer Price Index (PPI) are likely to be in focus for now. The YoY figures for both the price indices seem to have recovered to 4.2% and -1.5% versus 3.8% and -1.6% respective priors.

Additionally, Australia’s housing data, comments from the Reserve Bank of Australia’s (RBA) Governor Philip Lowe and Mid-Year Economic and Fiscal Outlook will also have their impacts on the kiwi pair as being the updates from the largest Customer.

Technical Analysis

Unless declining back below the 200-day Simple Moving Average (SMA) level of 0.6540, prices are likely to aim for 0.6600 mark.