- NZD/USD remains on a back foot as the US President Donald Trump states a slew of negative comments concerning China, Hong Kong and Huawei.
- President Trump’s sustained criticism of the Fed, early Asian morning limit the losses.
- New Zealand PPI, trade/political news in the spotlight.
With the latest comments from the US President Donald Trump exerting downside pressure on the commodity-linked currencies, NZD/USD begins the trading week under pressure while making the rounds to 0.6430.
In his media remarks, President Trump turned down recent speculations that the US will allow a 90-day grace period to China’s Huawei while keeping the statement that the Huawei is a national threat. Mr. President also said that I’m not ready yet to make a trade deal with China. Further, his comments that again dragged China’s actions in Hong Kong as a catalyst for a trade deal and that of criticizing the US Federal Reserve were mostly same as previous. However, comments that he doesn’t expect a recession seem quite upbeat and helped cap the market reaction.
The Kiwi has been bearing the burden of broad US Dollar (USD) strength and immense uncertainty surrounding the US-China trade deal ever since the US President announced fresh trade tariffs on Chinese products. The sentiment didn’t change despite announcing some intermediate relief as China’s press played its role.
Following the initial market reaction to the US President’s media remarks, investors will wait for China’s response to determine the near-term trade direction. It should also be noted that New Zealand’s second quarter (Q2) Producer Price Index (PPI) will decorate the economic calendar.
The descending triangle on four-hour chart portrays 0.6420 and 0.6445 as the key short-term levels to watch while 0.6378 and 0.6510 can please traders during the breakouts.
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