NZD/USD fails to hold onto recovery gains amid fresh doubts on growth, phase-one

NZD/USD drops to 0.6538, after flashing a fresh session low of 0.6532, during early Wednesday. The quote recently surged to 0.6555 after the New Zealand Government announced heavy infrastructure spending. However, a closer look at the details and growth forecast join downbeat trade comments from the United States (US) White House Adviser Peter Navarro resumes the fall.

New Zealand (NZ) government’s 12 billion New Zealand dollar (NZD) announcement for infrastructure spending fails to tame fears of slow growth and fresh trade war. The NZ Half-Year Economic and Fiscal Update (HYEFU) suggest that the year 2019 Gross Domestic Product will be 2.4% versus 3.2% prior. The report also cited fears from Brexit and the US-China trade war.

Additionally, comments from the White House Adviser Navvaro that it's up to the Chinese as to whether to get a deal seems to have exerted additional downside pressure on the pair.

Analysts at Westpac keep a bearish bias for NZD/USD while saying, “The Half Year update will have little impact on our economic forecasts. No new operational spending was announced, although forecast surpluses will be smaller due to the weaker starting point for the economy. $12bn of capital spending was announced, but this was spread over many years and therefore will have only a small impact on the economy.”

Markets will now be on the lookout for details on the US-China trade deal while also keeping eyes on the US inflation data ahead of the last meeting of the Federal Open Market Committee (FOMC).

Technical Analysis

Monthly high near 0.6580 acts as a key resistance while sustained downpour below 200-day Simple Moving Average (SMA) of 0.6540 can drag prices to November month high of 0.6466.