- NZD/USD remains mildly negative for the second consecutive day.
- China’s RRR cut and US-China trade optimism should have offered an additional boost to the Kiwi.
- Traders await confirmation of Chinese manufacturing recovery amid holidays in New Zealand and Japan.
NZD/USD trades on the back foot near 0.6720 amid the initial Asian session on Thursday. Despite recovering in the last few minutes, the prices are still in the negative for the second day in a row. Traders might be waiting for the Caixin Manufacturing PMI before cheering the recent trade-positive news from China.
Among them, the People's Bank of China (PBOC) 50 basis points (bps) Reserve Ratio Requirement (RRR) cut, effective from January 5, grabs the headline. The same is likely to increase the flow of funds into the market after the Chinese central bank announced changes to the benchmark lending rate during the weekend.
Also being a positive signal is the US-China trade relations. After the confirmation of Chinese Vice Premier Liu He’s trade visit to Washington, the US President Donald Trump also said that the phase-one will be signed on January 15 and talks for phase-two will begin with this China meet then after. Confirming the optimism is White House Advisor, Peter Navarro, who recently mentioned that phase one trade deal is “in the bank”.
Even so, the absence of traders and the on-going political tension between the US and the Middle East might have been the reason for the kiwi pair’s recent weakness despite the upbeat catalyst. Additionally, traders are likely to wait for the confirmation of China’s manufacturing strength after the official PMI data flashed back-to-back above 50 mark recently. In doing so, December month Caixin Manufacturing PMI, expected 51.7 from 51.8, will be observed closely.
Following the release of China’s PMI, markets may concentrate on trade headlines and wait for the US data, including Markit Manufacturing PMI and weekly Initial Jobless Claims for fresh impulse.
Technical Analysis
Buyers will keep targeting an area including highs marked since April 12, near 0.6783/92, unless prices close below a two-week-old rising trend line and 61.8% Fibonacci retracement of March-September fall, around 0.6660/55.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.