NZD/USD nears the weekly high of 0.6625 after New Zealand’s upbeat CPI

NZD/USD pops near the weekly high of 0.6625, before stepping back to 0.6620, after New Zealand’s fourth quarter (Q4) CPI data pleased kiwi buyers during the early Friday.

New Zealand’s Q4 CPI came in well near the Reserve Bank of New Zealand’s (RBNZ) expectations while flashing better than 0.4% QoQ reading to 0.5% as well as higher than the yearly forecast of 1.8% to 1.9%.

Read: Breaking: New Zealand Q4 CPI: YoY1.9% / QoQ 0.5% (NZD bullish)

Chinese outbreak of coronavirus has been hitting the headlines off-late. The humanly transmitted virus so far took 17 lives so far and has confirmed traces outside the dragon nation. Even if the World Health Organization (WHO) stepped back from terming it as an international emergency and the Chinese authorities are all over it, while also forgetting the Lunar New Year, it becomes a key threat to the global economy considering its impact on tourism and industrial production.

Also weighing on the trading sentiment is the US threats to the EU and the UK relating to levying tariffs. Given the EU constitutes a major chunk of the American exports (nearly 20%), the region’s sturdy response to the likely trade battle worries the market watchers.

Risk-tone has been heavy off-late, amid fears emanating from China, which in turn drag the US 10-year treasury yields down by four basis points (bps) to 1.73% by the end of Thursday’s trading. However, S&P 500 Futures seem to portray Wall Street’s mildly positive performance as flashing 0.17% gains to 3,325 by the press time.

Although headlines concerning trade and China’s coronavirus will be the key to watch for near-term trade direction, preliminary readings of Markit PMIs will also entertain momentum traders during the day.

Technical Analysis

While pair’s recovery after Wednesday’s Doji signals further upside towards 21-day SMA near 0.6655, a sustained downside below December 18 low of 0.6580 highlights a 200-day SMA level near 0.6510 as the key support.