NZD/USD: Under pressure around 4-year low amid broad USD strength

Downbeat ANZ data, overall US Dollar (USD) strength exerts downside pressure on NZD/USD around September 2015 level.
China steps back from retaliation against the US tariffs.
New Zealand Building Permits, trade news in the spotlight for now.

Anil Panchal FXStreet

Following its slump to the multi-year low, mainly due to the greenback’s overall strength and sluggish ANZ data, the NZD/USD pair takes the rounds to 0.6310 at the start of Friday’s Asian trading session.

Activity Outlook and Business Confidence numbers from the Australia and New Zealand Banking Group (ANZ) offered major damage to the Kiwi pair on initial Thursday. August month’s data suggested that Activity Outlook dropped from 5.0% to -0.5% while Business Confidence plummeted to -52.3 versus -44.3 earlier.

Also adding the weakness to NZD/USD was early-day pessimism surrounding the US-China trade relations, the tussle between the economies at South China Sea and China’s strong military presence at Hong Kong.

While upbeat comments from Chinese Commerce Ministry and holding back of the retaliation to the recently announced tariff hike by the US receded trade war risk and helped the US treasury yields to recover, the resultant strength of the USD continues to hold the pair near late-2015 lows.

NZD/USD traders will now keep an eye over New Zealand’s July month seasonally adjusted (s.a.) Building Permits MoM that slumped -3.9% previously. Additionally present on their radar will be trade/political news concerning the US and China.

Technical Analysis

Given the overbought conditions of 14-day relative strength index (RSI), coupled with recently released trade-positive news, prices may witness a pullback towards August 22 low near 0.6360, a break of which can escalate the recovery in the direction to three-week-old descending trend-line close to 0.6385. Meanwhile, a downside break of 0.6300 round-figure can fetch the quote to September 2015 lows surrounding 0.6236/43.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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