NZD/USD below 0.68 as investors shun risk, China data misses estimates

The NZD/USD pair has dropped more than 60 pips in the last one hour, courtesy of risk aversion and a weaker-than-expected China data.

Kiwi ran into offers near 0.6860 an hour ago, reportedly due to the news that Reserve Bank of New Zealand is considering almost doubling the required capital banks would need to hold to bolster the financial system’s capacity to handle any shocks. That may not be the case as doubling capital requirements would tighten financial conditions and boost borrowing costs - which would be positive for the NZD. 

Also, the news hit the wires in early Asia and Kiwi began losing altitude much later after investors began selling risk. The S&P 500 futures fell into the red, driving the NZD/JPY cross lower. As of writing, the S&P 500 futures are down 0.60 percent and the JPY cross is down 1 percent. 

The bearish tone around the Kiwi strengthened further a few minutes ago, pushing the NZD/USD below 0.68 for the first time since Nov. 28, as China's retail sales and industrial production numbers missed estimates. Retail sales for November came in at 8.1 percent year-on-year, missing the estimate of 8.8 percent by a big margin. Meanwhile, industrial production also missed estimates by printing at 5.4 percent.

Looking forward, investors may continue to shun risk due to signs of a slowdown in China. As a result, NZD/USD may remain on the defensive.

NZD/USD Technical Levels