NZD/USD registers three-day losing streak as US and China jostle over virus spread
- NZD/USD drops over 0.50% during the initial hours of trading.
- US diplomats cite intelligence reports to allege China for the virus outbreak, the dragon nation considers them as a bluff.
- Gilead’s Remdesivir will be available during this week.
- A light calendar will keep trade/virus updates as the key catalysts.
NZD/USD declines 0.65% to 0.6025 amid the early Asian session on Monday. In doing so, the kiwi pair registers a three-day losing streak amid the US-China tussle surrounding the coronavirus (COVID-19) outbreak.
Having initially attacked China’s inability (selective) to report the virus outbreak to the World Health Organization (WHO) on time, US President Donald Trump’s recent allegations take clues from an intelligence report to back the allegations. The Republican leader previously suggested that the experiments in the laboratory of virology in Wuhan were responsible for the virus outbreak.
Read: US President Donald Trump: “Intelligence has just reported to me that I was correct” on China
Not only US President Trump but Secretary of State Mike Pompeo also joined the line to attack China over its mishandling of the virus, which in turn became the global challenge.
In a reaction to the allegations, China’s Global Times mentioned that Secretary Pompeo's anti-China bluff strategy reveals an all-or-nothing mentality to fool US voters. The editorial piece also said, “The truth is that Pompeo does not have any evidence, and during Sunday's interview, he was bluffing.”
While the trade-war risk is currently weighing on the markets, news that Gilead’s Remdesivir, a championed drug for the virus, fails to please the traders.
As a result, the risk aversion wave exerts downside pressure on the commodity-linked currency and also weighs on the US stock futures, S&P 500 Futures down more than 1.0% by press time.
Given the lack of major data/events from New Zealand, traders will keep eyes on the trade/virus news for fresh impetus. However, second-tier inflation, jobs and housing data from Australia may offer intermediate moves to the kiwi pair.
Technical analysis
An ascending trend line from March 23, 2020, close to 0.6025/20 acts as the near-term strong support, a break of which can drag the quote to 0.5910, comprising the low marked on April 23. Meanwhile, an upward sloping resistance line from March 27, around 0.6200, could question the pair’s recovery moves beyond 0.6100 and the previous month top surrounding 0.6175.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
