NZD/USD nears 17-week high, ignores trade tantrum, downbeat NZ data

NZD/USD seesaws around 0.6520, the highest since August 07, at the start of Wednesday’s Asian session. The pair have recently been the Bull’s favorite despite on-going trade war concerns and soft data at home.

The recent fortnight release of New Zealand’s (NZ) GDT Price Index slipped below +0.5% forecast and +1.7% prior to -0.5%. Details suggest the prices of Whole Milk Powder (WMP) seem to lose momentum while rising at 0.1%. The Australia and New Zealand Banking Group (ANZ) cites demand from China to be the reason behind it as it says, “WMP prices were weaker than expected, possibly due to reduced demand from China now that buying to supply the new tariff window in the new year has closed.”

The kiwi pair also defied the broad market theme, i.e. a possible trade war between the United States (US) and China, while being at the top of G10 performers. As per the latest updates, the US Trade Secretary Wilbur Ross keeps signaling that President Trump won’t sign a deal unless it's good. Further, the US Vice President (VP) Mike Pence also crossed wires, via Reuters, while saying that the US President Trump will not allow China to take advantages of United States.

Furthermore, the Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr and Deputy Governor Geoff Bascand also spoke off-late. While the Governor praises the economic performance as compared to the rest of the world, RBNZ’s Bascand sees interest rates being low for some time.

While everything is against the moves, the Kiwi still rises and the reason could be found in the Commodity Futures Trading Commission’s (CFTC) positioning data for November 20 to 26. “CFTC positioning data continues to display a reluctance in the market to offload NZD shorts. In fact, in the week of 20-26 November, speculators added net shorts and pushed NZD net short positioning back above 50% of open interest. In line with this view, we think that the large speculative short positions on NZD could help to exacerbate the upside move in the currency as short positions are squeezed,” says ING.

Moving on, investors can keep eyes on trade headlines for intermediate market moves whereas ANZ Commodity Price Index for November, expected 1.6% versus 2.7% prior, could also direct the quote.

Technical Analysis

With the 14-day Relative Strength Index (RSI) flashing overbought conditions, sellers may look for entry if the quote slips below 200-day Exponential Moving Average (EMA) level of 0.6515. In doing so, November high near 0.6466 will become their immediate target. On the upside, August month top surrounding 0.6590 and 0.6600 round-figure remain on the bull’s radar.