NZD/USD flirts with 0.6810 ahead of Fed’s Powell and China Caixin PMI

• The NZD/USD pair is trading around 0.6810 during initial Friday.
• The pair remained weak in recent days as the US Dollar gained across the board on positive data and safe-haven appeal.
• Speech from the Fed’s Powell and monthly reading of China’s Caixin manufacturing PMI will be observed for immediate impulse.

NZD/USD trades near 0.6810 during the early Asian session on Friday. The pair is struggling to stop previous declines ahead of key events like Fed Chair Jerome Powell’s speech and China’s Caixin Manufacturing PMI for February month. It should also be noted that developments at the US-China trade deal are also confusing commodity and antipodeans’ traders.

The New Zealand Dollar (NZD) stretched its Wednesday losses on Thursday after overall strength of the US Dollar and doubts on the US-Sino trade pact troubled commodity traders. The US Dollar mainly benefited from an upbeat print of the US Gross Domestic Product (GDP) growth during the last quarter (Q4) of 2018. Advance estimates suggested that the GDP grew 2.6% versus 2.3% forecast and 3.4% prior. Also, a strong rebound in the Chicago PMI in February to 64.7 from 56.7 in January also portrayed robust strength of the world’s largest economy.

In addition to the data-driven strength, the greenback also gained due to its safe-haven appeal. The USD benefited from the on-and-off signals emanating from the US-China trade and the Trump-Kim summit. After witnessing the US trade representatives’ announcement concerning no tariff hike on China’s goods until further notice, there conflicting signals for the future course of the trade from Trump administration. The US Treasury Secretary Steve Mnuchin was spotted saying more work to do for a trade accord whereas economic adviser Larry Kudlow signaled that the historic pact is near to arrive. The Trump-Kim summit also didn't go well after Trump moved out of a meeting saying North Korea want all sanctions to be removed forever in exchange for partial denuclearization.

Few catalysts that maintained pressure on the Kiwi during early Friday were ANZ consumer confidence and terms of trade. The consumer confidence gauge slipped to 120.8 in February from the January month’s 121.7 while quarterly terms of trade declined -3.0% during Q4 2018 versus -0.3% the previous quarter. The January month Building Permits grew 16.5% from upwardly revised 5.4% prior.

Next up in the investors’ radar will be the Fed Chair’s speech and monthly reading of China’s Caixin Manufacturing purchasing manager index (PMI). Fed’s Powell is due to deliver a speech titled "Recent Economic Developments and Longer-Term Challenges" at the Citizens Budget Commission Awards Dinner. The February month Caixin Manufacturing PMI for China is likely to print 48.5 figure against 48.3 prior.

While immediate concerns for the commodity and commodity-linked currencies (like AUD, NZD and CAD) are not so strong, their near-term moves depend mainly upon the US-China trade deal and upcoming details/events.

NZD/USD Technical Analysis

A two-month-old ascending trend-line, at 0.6770, can offer immediate support to the NZD/USD pair, a break of which highlights the importance of 0.6755-50 area that comprises 100-day and 200-day simple moving averages.

On the upside, 0.6855 and 0.6900 – 0.6910 are likely nearby strong resistances for the pair traders to watch.