NZD/USD trades with modest losses, just above 0.6500 handle

The NZD/USD pair refreshed daily lows, around the 0.6500 handle in the last hour, and has now erased a major part of the previous session's positive move to four-month tops.

The pair failed to capitalize on its goodish positive move witnessed over the past two trading session and came under some selling pressure on Wednesday in reaction to a further escalation in tensions between the world's two largest economies.

Focus remains on trade developments

It is worth recalling that the US President Donald Trump on Tuesday indicated that a trade deal with China might have to wait until late 2020. Adding to this, the US Congress overwhelmingly approved a bill condemning China’s mass detention of ethnic Muslims in the western region of Xinjiang.

The latest developments came after Trump last week signed a bill supporting Hong Kong’s pro-democracy protesters. This coupled with China's warning to retaliate was seen as another setback to the trade negotiations, which weighed on the global risk sentiment and exerted some pressure on perceived riskier currencies – like the kiwi.

Meanwhile, comments by China's foreign ministry did little to ease market concerns, rather contributed to the latest leg of a slide over the past hour or so. China's foreign ministry said that the US will pay the price over Hong Kong and Xinjiang bills and they will not set any timeline or deadline for a trade deal with the US.

The downtick, however, remained limited, at least for the time being, and was being cushioned by a mildly weaker tone surrounding the US dollar. Against the backdrop of the recent dismal US macro data, some renewed weakness in the US Treasury bond yields held the USD bulls on the defensive and seemed to be the only factor lending some support.

Moving ahead, market participants now look forward to the US economic docket, highlighting the release of ADP report on private-sector employment and ISM Non-Manufacturing PMI, which has the potential to influence the USD price dynamics and might produce some short-term trading opportunities later during the early North-American session.

Technical levels to watch