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NZD/USD drops to 0.5950 despite downbeat US Dollar, yields as China PMI, Fed’s favorite inflation loom

  • NZD/USD stays pressured after reversing from three-week high.
  • Mixed concerns about China, downbeat NZ data weigh on Kiwi.
  • US Dollar traces softer yields as US statistics suggest nearness to Fed policy pivot.
  • China’s official PMI, NZ sentiment figures will entertain traders ahead of US Core PCE Price Index.

NZD/USD bucks the overall trend of cheering the US Dollar weakness by extending the previous day’s reversal from a three-week high to 0.5950 during the early Asian session on Thursday. In doing so, the Kiwi pair justifies downbeat data at home and mixed concerns about a major customer China amid a cautious mood ahead of the Fed’s preferred inflation gauge. It’s worth noting that the failure to cross May’s low during the early-week rebound also favored sellers of the Antipodeans.

A stark fall in New Zealand (NZ) Building Permits joins the Reserve Bank of New Zealand’s (RBNZ) status quo to weigh on the NZD/USD pair the previous day. That said, the NZ Building Permits for July marked a notable slump of 5.2% MoM versus 0.2% expected and 3.4% prior (revised from 3.5%).

On the other hand, China’s reaction to the US allegations that “it’s being risky for businesses” challenged the previous hopes of a smooth running of the Sino-American talks in Beijing. However, a slew of Chinese banks reduced mortgage rates and favored the hopes of witnessing more stimulus from the Asian major, which in turn repaired the damages to sentiment outside New Zealand.

Elsewhere, softer prints of the US statistics bolstered the call of the Federal Reserve’s (Fed) policy pivot and weighed on the US Dollar, as well as the Treasury bond yields. That said, the second readings of the US second quarter (Q2) Gross Domestic Product (GDP) Annualized declined to 2.1% from 2.4% initial forecasts while the GDP Price Index also eased to 2.0% versus the first readings of 2.2%. Further, the preliminary readings of the Personal Consumption Expenditures (PCE) Prices also edged lower to 2.5% from 2.6% prior estimations for the said period. More importantly, the ADP Employment Change dropped to 177K compared to 195K market forecasts and 371K previous readings (revised from 324K).

Amid these plays, the US Dollar Index (DXY) dropped for three consecutive days to the lowest level in two weeks, making rounds to 103.15-10 of late. That said, the benchmark US 10-year Treasury bond yields remain pressured at the lowest levels in three weeks, around 4.11% by the press time.

Moving on, New Zealand’s ANZ Activity Outlook and Business Confidence survey details for August will join China’s official NBS Manufacturing PMI and Non-Manufacturing PMI for the said month to entertain the NZD/USD traders. However, major attention will be given to the Fed’s preferred inflation gauge, namely the US Core PCE Price Index for August, for clear directions amid dovish calls about the US central bank.

Technical analysis

Failure to cross May’s low of 0.5985 during the early-week rebound from the yearly bottom surrounding 0.5885 keeps the NZD/USD bears hopeful even as the oversold RSI offers a bumpy road to the Kiwi sellers.

Additional important levels

Overview
Today last price0.5947
Today Daily Change-0.0025
Today Daily Change %-0.42%
Today daily open0.5972
 
Trends
Daily SMA200.5987
Daily SMA500.6115
Daily SMA1000.6146
Daily SMA2000.6225
 
Levels
Previous Daily High0.5979
Previous Daily Low0.5887
Previous Weekly High0.5987
Previous Weekly Low0.5885
Previous Monthly High0.6413
Previous Monthly Low0.612
Daily Fibonacci 38.2%0.5944
Daily Fibonacci 61.8%0.5922
Daily Pivot Point S10.5913
Daily Pivot Point S20.5854
Daily Pivot Point S30.5821
Daily Pivot Point R10.6005
Daily Pivot Point R20.6038
Daily Pivot Point R30.6097

Author

Anil Panchal

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.

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