NZD/USD erases daily gains to mid-0.65s on US-China trade war headlines
- US President Donald Trump announces new tariffs on Chinese imports.
- Concerns over prolonged US-China trade conflict weigh on antipodeans.
- US Dollar Index turns red on the day below 98.50.
After advancing to a fresh daily high of 0.6580 earlier in the session, the NZD/USD pair reversed its direction and erased its daily following US President Trump's surprise announcement of new tariffs on Chinese imports. As of writing, the pair was virtually unchanged on the day at 0.6555.
"Trade talks are continuing, and during the talks the US will start, on September 1st, putting a small additional tariff of 10% on the remaining 300 billion dollars of goods and products coming from China into our country," Trump said, via Twitter, and explained that these tariffs will be separate from the 25% tariffs already imposed on the $250 billion worth of Chinese imports.
Falling T-bond yields hurt USD
Although this announcement weighed on trade-sensitive antipodeans, the sharp drop witnessed in the US Treasury bond yields weighed on the Greenback and allowed the pair to limit its losses.
The 10-year US T-bond lost more than 6% and touched its lowest level since November 2016 at 1.885%, forcing the US Dollar Index to continue to move away from the multi-year high that it set at 98.93 earlier today. At the moment, the index is down 0.17% on the day at 98.40.
There won't be any macroeconomic data releases from New Zealand during the Asian trading hours and markets will be paying close attention to see if China retaliates. Later in the day, the labour market data from the US will be the last significant macroeconomic data release of the week.
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
