- NZD/USD retreats from a multi-month high set on Thursday, though the downside seems limited.
- China’s COVID-19 woes weigh on investors’ sentiment and dent demand for the risk-sensitive Kiwi.
- Bets for less aggressive Fed rate hikes should act as a headwind for the USD and help limit losses.
The NZD/USD pair comes under some selling pressure on Friday and reverses the previous day's positive move to the 0.6300 neighbourhood, or its highest level since August 18. The intraday downtick extends through the first half of the European session and drags spot prices to a fresh daily low, back below mid-0.6200s in the last hour.
Worries about the worsening COVID-19 situation in China keep a lid on the recent optimistic move in the markets and turn out to be a key factor undermining the risk-sensitive Kiwi. In fact, China announced strict curbs in several major cities in the wake of a record-high jump in daily COVID-19 cases. The developments add to concerns about a further slowdown in economic activity and temper investors' appetite for perceived riskier assets.
The downside for the NZD/USD pair, however, is more likely to be limited amid the underlying bearish sentiment surrounding the US Dollar. The November Federal Open Market Committee (FOMC) meeting minutes released on Wednesday revealed that officials were largely satisfied they could stop front-loading the rate increases. This, in turn, reaffirms bets for a 50 bps lift-off in December, which leads to a further slide in the US Treasury bond yields and might continue to weigh on the buck.
Apart from this, an unprecedented 75 bps rate hike by the Reserve Bank of New Zealand (RBNZ) on Wednesday supports prospects for the emergence of some dip-buying around the NZD/USD pair. Hence, it will be prudent to wait for strong follow-through selling before positioning for a deeper pullback amid absent relevant economic data and thin trading volumes. Nevertheless, spot prices remain on track to post gains for the sixth successive week.
Technical levels to watch
|Today last price||0.6237|
|Today Daily Change||-0.0031|
|Today Daily Change %||-0.49|
|Today daily open||0.6268|
|Previous Daily High||0.629|
|Previous Daily Low||0.622|
|Previous Weekly High||0.6206|
|Previous Weekly Low||0.6062|
|Previous Monthly High||0.5874|
|Previous Monthly Low||0.5512|
|Daily Fibonacci 38.2%||0.6263|
|Daily Fibonacci 61.8%||0.6247|
|Daily Pivot Point S1||0.6229|
|Daily Pivot Point S2||0.6189|
|Daily Pivot Point S3||0.6159|
|Daily Pivot Point R1||0.6299|
|Daily Pivot Point R2||0.6329|
|Daily Pivot Point R3||0.6369|
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.