NZD/USD drops below 0.7000 amid subdued markets, firmer USD
- NZD/USD reverses the previous day’s recovery moves, drops the most in a week.
- Market sentiment dwindles amid covid woes and mixed updates concerning central bankers.
- Light calendar highlights sentiment-related headlines as the key catalysts.
NZD/USD takes offers around 0.6995, down 0.30% intraday as poking the weekly bottom amid Thursday’s Asian session. In doing so, the Kiwi pair leads G10 losers, unfortunately, due to the US dollar’s sustained strength and the coronavirus (COVID-19) woes. Also backing the bears could be an absence of bullish headlines conveying hopes of the RBNZ’s rate hikes, which did favor the quote the previous day.
US dollar remains on the front foot as the FOMC minutes failed to provide any clear guidance on future monetary policy actions. That said, the US dollar index (DXY) seesaws around the highest since early April, tested on Wednesday, as flashing 92.73 as a quote.
Other than the indecision among the Fed policymakers, coupled with an absence of any direct hints suggesting rate hike, the escalating covid woes also weigh on the market sentiment and put a safe-haven bid under the US dollar.
Recently, South Korea registered record daily infections and Japan is also up for extending the emergency in Tokyo. Further, Indonesia marked an all-time high death toll the previous day whereas Australia is also struggling with the woes and have already announced further local lockdowns.
It’s worth mentioning that various top-tier banks backed the hopes of the Reserve Bank of New Zealand’s (RBNZ) rate hike during late 2021 the previous day while citing upbeat quarterly business survey outlook and the government’s ability to tame the pandemic at home.
Amid these plays, S&P 500 Futures drop 0.10% intraday from the record top, marked on Wednesday, whereas the US 10-year Treasury yields drop 1.5 basis points near the lowest since late February.
Given the lack of major data/events, coupled with risk-off mood-backed US dollar strength, NZD/USD traders should keep their eyes on the qualitative catalysts for fresh impulse.
Technical analysis
Failures to cross 200-DMA, around 0.7070, followed by the downside break of the 0.7000 threshold, directs NZD/USD sellers towards a three-week-old support line near 0.6955.
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.
