- NZD/USD remains firm around the monthly top.
- Broad US dollar weakness majorly contributes to the pair’s strength.
- China’s March month trade numbers in focus, for now, coronavirus updates remain as the crucial catalyst.
While extending its pullback from intraday lows around 0.6070, NZD/USD remains on the front foot near 0.6100 during Tuesday’s Asian session. The kiwi pair registers seven-day winning streak while trading close the highest levels last seen on March 16. The reason for the run-up could be traced from the broad US dollar weakness amid a widespread outbreak of the coronavirus (COVID-19) in the US.
Upbeat comments from US President Donald Trump and Treasury Secretary Steve Mnuchin, not to forget the attempt to placate traders during the Task Force Briefings, fail to supersede fears of the pandemic.
The deadly disease has so far infected more than 580,000 and claimed the lives of above 20,000 people in the world’s largest economy. With this, the US also becomes the global hotspot for the pandemic.
On the other hand, New Zealand’s (NZ) handling of the virus outbreak has so far gained praise whereas the latest NZ Visitor Arrivals for February, down 10.8% YoY versus +2.9% prior, signals further hardships for the economy. Even so, the kiwi remains mostly strong due to its self-reliance in food as well as upbeat fundamentals.
Market’s trade sentiment seems to have recovered in Asia as the US stock futures flash mild gains of below 0.50% while parting ways from the previous day’s of downbeat Wall Street performance. However, the earnings season is on the door and market giants are likely to register murky numbers due to the lockdowns in many countries, which in turn could exert additional downside pressure on the US dollar.
On an immediate basis, China’s March month trade balance could offer fresh direction to the pair. Forecasts suggest a recovery in the headlines Trade Balance figures from $-7.09B to $18B. Further, the YoY Exports likely to bounce from -17.2% to -15% but Imports may drop to -8% from -4.0% previous readouts. Even if China data signals further upside of the pair, a likely disappointment due to the broad efforts to tame the virus can’t be ruled out.
Technical analysis
Unless declining below the monthly support line, currently at 0.6040, NZD/USD can keep rising towards a 50-day SMA level of 0.6155.
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