NZD/USD bears taking back control

NZD/USD is trading at 0.6595 having travelled between a low of 0.6576 and a high of 0.6662. 

The price of the bird has been under pressure and is down some 0.9% at the time of writing on dollar strength. 

The market's risk appetite was soured over the last couple of days owing to the concerns over the swell in the coronavirus second waves across the US and Europe and lack of progress in a US stimulus package. 

US equities finished in the red and the CBOE volatility index VIX , investors' fear gauge, hit a one-week high and Wall Street's indexes dipped for the third straight day.

The US President Donald Trump said he is willing to raise his offer of $1.8 trillion for a COVID-19 relief deal with Democrats in Congress, but the idea had cold water thrown all over it by his fellow Republican, Senate Majority Leader Mitch McConnell.

Meanwhile, the additional softer AUD over the past 24hrs hasn’t helped.

The RBA's Governor Lowe was fanning the rate cut flames and mulling buying longer-dated bonds.

AUD long-end bond yields fell and NZD bonds followed suit.

''We expect the NZD to continue to gyrate around our 0.65 forecasts for the next few quarters, with cross-currents aplenty,'' analysts at ANZ bank said.

US election noise

Meanwhile, with less than 20 days until the Nov. 3 election, Trump and Democratic challenger Joe Biden are set to hold duelling prime-time town halls on Thursday instead of their second presidential debate.

The presidential candidates will respond to questions from voters at two live, nationally televised town-hall-style events.

Unusually, the programs will be broadcast at the same time on rival networks, although recordings of each event will be available to viewers afterwards. 

The debates have had little impact on markets and this is therefore going to be even less of an event for markets given the format of such an event and the lack of interaction between the two candidates for markets to gauge probable electorate sentiment. 

Nevertheless, the aftermath will be of interest to markets as the media spins the outcome in favour of one campaign or the other.  

NZD/USD levels and DXY analysis

The reverse head and shoulders in the making could be a bearish factor for the kiwi for the near future: