NZD/USD: Bears looking to retake control below 0.6600
- NZD/USD stays in a choppy range below 0.6580 following its pullback from 0.6601.
- New Zealand Food Price Index grew past-0.5% to 1.2% in July.
- Market sentiment struggles to keep the previous day’s upside momentum amid mixed catalysts.
- Aussie employment data, updates concerning US stimulus, coronavirus and trade wars will be the key.
NZD/USD attacks the lower end of the immediate trading range while trading near 0.6574 during the early Asian session on Thursday. The kiwi pair managed to recover the RBNZ-led losses during late-Wednesday amid risk-on mood. However, the recent challenges to the trading sentiment keep the bears hopeful. In doing so, the pair also ignores upbeat prints of New Zealand’s Food Price Index for July. The price data crossed 0.5% prior with 1.2% MoM.
Dovish RBNZ can’t be ignored…
Upbeat US Consumer Price Index (CPI) data and an absence of major negatives from the Sino-American frontier helped NZD/USD to recovery the RBNZ-led losses the previous day. However, the central bank’s dovish play precedes the latest coronavirus (COVID-19) resurgence and the resulted lockdowns. As a result, the policymakers are likely to turn more pessimistic during their next appearances.
While identifying this, the Australia and New Zealand Banking Group (ANZ) said, “Now that the RBNZ has adopted a tactical approach to bond purchases and specifically mentioned its desire to actively get the bond curve lower and flatter, we suspect that we will see the pace of bond purchases step up, which will drive long end rates lower, and that will eventually weaken the Kiwi, USD gyrations notwithstanding.”
Talking about the risks, dimming prospects that the US policymakers can overcome stimulus deadlock join the on-going trade wars, not to forget the COVID-19, weigh on the market sentiment. The latest comments from US Trade Representative (USTR) Robert Lighthizer and Treasury Secretary Steve Mnuchin recently stopped the S&P 500 Futures from following its Wall Street benchmark that closed near the all-time high.
Although US President Donald Trump stays ready to cut the payroll taxes, his hard stand against China and Europe will keep the risk-tone sentiment pressured. As a result, the kiwi buyers may witness a sustained weakness in the absence of any major positives. While searching for clues, the pair traders will observe Australia’s July month employment data for fresh impetus. Additionally, the risk factors emanating from the US and virus can keep the markets entertained.
Technical analysis
Unless successfully crossing 21-day EMA near 0.6600, NZD/USD prices become vulnerable to revisit 0.6520 level comprising 50-day EMA that triggered the quote’s post-RBNZ bounce.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
