NZD/USD tanks below 0.6400 as traders eye RBNZ interest rates decision

NZD/USD drops from last week’s highs around 0.6468 on risk aversion.
China’s economic slowdown looming and bleak NY Fed Empire State Index underpin the US dollar.
The Reserve Bank of New Zealand is expected to hike rates by 50 bps on Wednesday.

Christian Borjon Valencia FXStreet

The NZD/USD snaps five days of gains and tumbles from around last week’s highs due to a mixed sentiment, spurred by weak Chinese economic data, alongside a dismal NY Fed Empire State Manufacturing Index, which slightly weakened the greenback.

At the time of writing, the NZD/USD is trading at 0.6369, after hitting a daily high at 0.6456, before nosediving towards the daily low at 0.6355, as traders sought safety ahead of the release of FOMC’s minutes on Wednesday.

US equities are treading high, lifted by big tech companies. In the FX space, safe-haven peers are in control after China’s Industrial Production and Retail Sales data missed estimates. The PBoC reacted to the figures, slashing rates on its 1-year medium-term lending facility (MLF) from 2.85% to 2.75%, on growing concerns that the country will miss its 5% target by year’s end.

In the meantime, earlier in the US session, the NY Empire State Manufacturing Index for August got into contractionary territory, at -31.3 compared to +5 of estimates, causing a hiccup in the US Dollar Index, which ticked lower to 106.000, before resuming its rally towards 106.405, up 0.69%.

What to watch

All that said, the NZD/USD outlook is tilted to the downside. However, with the RBNZ monetary policy looming and traders expecting a 50 bps increase, it would cap kiwi’s falls towards lower levels. For NZD/USD buyers is crucial to hold the exchange rate above 0.6395; if not, a fall towards August 1 daily high-turned-support at 0.6350 before opening the door to further losses.

On the US front, the economic calendar will feature the Federal Reserve Open Committee (FOMC) minutes, US Housing data, Initial Jobless Claims, the Conference Board Leading index, and Fed speak.

NZD/USD Daily chart

NZD/USD Key Technical Levels

NZD/USD

Overview
Today last price	0.6369
Today Daily Change	-0.0068
Today Daily Change %	-1.06
Today daily open	0.6442

Trends
Daily SMA20	0.6283
Daily SMA50	0.6272
Daily SMA100	0.6442
Daily SMA200	0.6622

Levels
Previous Daily High	0.647
Previous Daily Low	0.6418
Previous Weekly High	0.647
Previous Weekly Low	0.6228
Previous Monthly High	0.633
Previous Monthly Low	0.6061
Daily Fibonacci 38.2%	0.645
Daily Fibonacci 61.8%	0.6438
Daily Pivot Point S1	0.6417
Daily Pivot Point S2	0.6392
Daily Pivot Point S3	0.6365
Daily Pivot Point R1	0.6468
Daily Pivot Point R2	0.6495
Daily Pivot Point R3	0.652

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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