NZD/USD holds onto recovery gains above 0.6600, trade news in focus

• NZD/USD cheers the US-China phase-one deal signing in.
• Mixed data at home adds to the pair’s recovery.
• Trade/political news, the US Retail Sales will be the key to watch.

NZD/USD rises to the intra-day high of 0.6620 during the early Thursday morning in Asia. The quote maintains the pullback from four-week low, triggered after the US-China phase-one deal signing. Also supporting the pair’s U-turn could be New Zealand data. While no major catalyst is up for publishing amid the Asian session, trade/political headlines can entertain the traders ahead of the US session that will offer December month Retail Sales.

The US and China finally signed the much-awaited phase-one deal of about $200 billion worth of import promises from Beijing to the US. Even so, the US holds certain tariffs on Chinese products and will better wait for the phase-two signing in to remove them all. However, Washington’s removal of China from the currency manipulator list was recently welcomed by the Chinese Vice Premier Liu He. On the other hand, the US Treasury Secretary Mnuchin said that China has agreed to put together very significant laws to follow through on its commitments and there will be additional tariff rollbacks in phase two of the trade deal.

With this, the market’s risk tone stays mildly positive with the US 10-year treasury yields taking rounds to 1.79% whereas the S&P 500 Futures rising 0.20% to 3,294.

It’s worth mentioning that New Zealand’s (NZ) December month Election Card Retail Sales (YoY) rose better than 2.1% forecast to 3.9% despite registering monthly drop to -0.8% versus -0.20% expected and +2.9% upwardly revised prior. Additionally, New Zealand’s REINZ House Price Index, published before few minutes, stepped back from 1.4% to 1.2% during December.

Given the mixed comments from the US and Chinese diplomats join not too impressive NZ data, traders will seek a major push to extend the latest run-up. In doing so, trade/political headlines could be considered as the only major fuel amid a lack of indicators on the economic calendar ahead of the US Retail Sales Control Group, expected 0.4% versus 0.1% previous.

Technical Analysis

Unless breaking 21-day SMA level, currently near 0.6655, the pair is less likely to avoid visiting December 18 low of 0.6555 and 200-day SMA around 0.6515 now.