- NZD/USD respects broad US dollar strength while ignoring upbeat NZ GDT data.
- The unconfirmed reports of missile attacks over the US spot Baghdad are in focus.
- The absence of economics will keep trade/political headlines on the driver’s seat.
Following its losses on Tuesday, NZD/USD makes rounds within a small range of 0.6635/45 during the initial Asian morning on Wednesday. The pair dropped to 0.6625, the lowest since December 25, during the previous day as the greenback managed to recover.
In doing so, prices failed to respect New Zealand’s (NZ) fortnightly release of Global Dairy Trade (GDT) data, the key to NZ’s dairy-based economy. The numbers rose well beyond the -0.8% forecast to +2.8%. Details suggest the Whole Milk Powder (WMP) grew 1.7% to $3,150, well within the past nine-month range of $3,000-$3,300 as spotted by Westpac.
The pair’s earlier declines could be attributed to the US dollar’s broad strength amid an absence of the US-Iran war and welcome data at home. The US ISM Non-Manufacturing PMI, Factory Orders and Trade Balance all posted better than forecast readings during their releases on Tuesday.
Recovery in the market’s risk-tone could also be witnessed with the US 10-year treasury yields gaining back beyond 1.82%.
Even so, the latest unconfirmed reports of an attack over the US facility in Baghdad keep the US-Middle East in focus. Previously, the US Defense Secretary Mark Esper said in an interview with CNN that the US wants to see the situation with Iran de-escalated but reiterated that they are ready to finish it if Iran were to start a war, per Reuters.
It’s worth mentioning that the US and China are still on track of writing the phase-one deal sometime during the next week. This ignores China’s refrain to alter quotas for US agricultural imports.
Traders will now keep eyes on the geopolitical headlines amid fresh fears and also because of the absence of any major data/events up for publishing.
Technical Analysis
The quote again drops below 21-day SMA, which in turn increases the odds of its further declines towards a 200-day SMA level of 0.6520. However, December 18 low near 0.6550 can offer an intermediate halt to the drop. Alternatively, 0.6700 holds the keys to the pair’s recovery.
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