NZD/USD: the worst performer and downside targets are set on 0.6675

The dollar is the strongest currency out there today so far, underpinned by US data, (US June ISM manufacturing index 60.2 vs 58.5 expected, Markit US June manufacturing PMI 55.4 vs 54.7 expected). The tone is sour a and the commodity-FX has been taking a battering. The Aussie was weighed by metal prices, (while Dalian iron ore was down 1.8% while Shanghai Composite was also down 0.85%). The Kiwi has broken the key support line, leading the way as the worst performer. 

In a continuing downside effect since the RBNZ's OCR Review that last week delivered a moderately dovish surprise to markets, NZD/USD has been pressured overnight as Asia got off to a poor start, (Nikkei closed down 2.21% today). There was also a marked deterioration in riskier assets and emerging markets. European stocks also ended lower after the Dow had its worst 3-week losing streak in over two years last week - it is little wonder the antipodeans are getting shunned.  

"Market pricing has shifted further downwards, to the extent that a 10% chance of a cut this year is priced in, and full hike is not predicted until March 2020,"

- analysts at Westpac bank Corporation explained. 

The week ahead:

For the Kiwi, the GDT price index will be key and eyes will be on Chinese data and indeed Aussie retail sales/RBA. Chinese risk is elevated with US tariffs kicking on on the 6th July while nonfarm payrolls will likely offer the most volatility over the actual event. 

NZD/USD levels

On the wide, while below the key 200-month moving average resistance at 0.7007 longer term technicals have kept bearish. RSIs remains biased to the downside longer term and RSI is back into oversold territory on this move with the price penetrating the 21st May 2016 support. Only a break above 0.6850 would alleviate the downside pressures and eyes are focussed on 0.6675.