NZD/USD: Under pressure around 0.6420 after NZ Building Permits amid trade war fears

NZD/USD registers the third consecutive negative day while taking rounds to 0.6420 during initial Friday morning in Asia. That said, the kiwi pair showed less reaction to better than forecast Building Permits while also showing a mild move to higher than previous Consumer Confidence data.

October month Building Permits contracted -1.1% versus -2.5% forecast and upwardly revised +7.4% prior. Earlier during the day, November month ANZ-Roy Morgan Consumer Confidence for November crossed 118 prior mark with 120.7 mark.

The latest political tension between the United States (US) and China, over Hong Kong law, seems to weigh over the export-oriented economies off-late. On Thursday, the US President Donald Trump’s passed a law requiring an annual inspection of Hong Kong to maintain the special trade status and enable the US State Department to announce sanctions against violators of human rights. China and Hong Kong rushed with harsh criticism of the same and warned the Trump administration to stay out of the personal matter.

As per the latest media release, China has clearly shown its intention to retaliate the US move. However, no guidelines have been provided. With this, markets are waiting for how it could affect the US-China trade talks that have been pleasing the risk-takers before yesterday.

That said, Thanksgiving Day in the US limited market’s move and a half-day open on Friday could also see a limited reaction to China’s warnings. Though risk tone can remain a bit heavy and the same may reflect in the commodity-linked currencies like the New Zealand dollar (NZD).

Technical Analysis

A monthly falling trend line joins 100-day Exponential Moving Average (EMA) to offer strong resistance to the pair around 0.6425, a break of which could propel the quote towards November 04 high near 0.6466. On the other downside, an upward sloping support line since October 10, at 0.6373 now, seems to be the key.