- Kiwi's sharp drop in Asia has poured cold water over the optimism generated by the pair's break above the four-month-long falling trendline earlier this week.
- The NZ-US 10-year yield spread hit a 3.5-month low today, signaling the NZD could be in for a deeper drop.
The NZD took a beating in Asia after the New Zealand August business confidence reading printed at a decade low.
At press time, the NZD/USD pair is trading at 0.6655, having hit a high of 0.6717 in early Asia. The ANZ business confidence fell to -50.3 in August and the details of the report revealed that 5 percent of firms surveyed by ANZ intended to reduce investment.
Further, a net 50.3 percent of survey respondents expected economic conditions to deteriorate in the year ahead. The gloomy outlook forced investors to venture out of the NZD.
As a result, the NZD/USD fell back below key descending trendline sloping downwards from the April 13 high and July 26 high, neutralizing the bullish outlook put forward by the upside break of the trendline witnessed on Tuesday.
More importantly, the spread between the US 10-year treasury yield and the New Zealand 10-year government bond yield dropped to -29 basis points today, the lowest level since May 15.
So, it seems safe to say that could suffer deeper losses in the next few days, especially if the rising trendline is breached on a daily closing basis.
NZD/USD Technical Levels
Support: 0.6657 (38.2% Fib R of 0.6544/0.6727), 0.6620 (Aug. 24 low), 0.66 (psychological level)
Resistance: 0.6675 (10-day MA), 0.6717 (Asian session high), 0.6742 (50-day MA)
NZD/USD daily chart
-636712015202873111.png)
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 fluctuates in daily range above 1.0600
EUR/USD struggles to gather directional momentum and continues to fluctuate above 1.0600 on Tuesday. The modest improvement seen in risk mood limits the US Dollar's gains as investors await Fed Chairman Jerome Powell's speech.
GBP/USD stabilizes near 1.2450 ahead of Powell speech
GBP/USD holds steady at around 1.2450 after recovering from the multi-month low it touched near 1.2400 in the European morning. The USD struggles to gather strength after disappointing housing data. Market focus shifts to Fed Chairman Powell's appearance.
Gold retreats to $2,370 as US yields push higher
Gold stages a correction on Tuesday and fluctuates in negative territory near $2,370 following Monday's upsurge. The benchmark 10-year US Treasury bond yield continues to push higher above 4.6% and makes it difficult for XAU/USD to gain traction.
XRP struggles below $0.50 resistance as SEC vs. Ripple lawsuit likely to enter final pretrial conference
XRP is struggling with resistance at $0.50 as Ripple and the US Securities and Exchange Commission (SEC) are gearing up for the final pretrial conference on Tuesday at a New York court.
US outperformance continues
The economic divergence between the US and the rest of the world has become increasingly pronounced. The latest US inflation prints highlight that underlying inflation pressures seemingly remain stickier than in most other parts of the world.