NZD/USD unperturbed by risk-recovery, drops to 0.6850

Firmer DXY and poor NZ data weigh.
Ignores recovery in risk sentiment.
Focus on the US tax reform vote.

Dhwani Mehta FXStreet

Despite a recovery in risk appetite across the financial markets in Asia, the NZD/USD pair remains heavily offered near two-week lows of 0.6845 levels.

NZD/USD: A test of 0.6818 imminent

The Kiwi prolongs its downward trajectory for the sixth straight today and remains on track to book the first weekly loss in three this week, as sentiment remains undermined by downbeat Chinese economic releases and divergent monetary policy outlooks.

The monetary policy divergence between the Fed and RBNZ is back in play, after an upbeat core CPI data bolstered the expectations of a Dec Fed rate hike, while NZ politics and dismal NZ fundamentals could leave the RBNZ in a wait-and-see mode.

The latest leg lower in the spot can be mainly attributed to the release of worse-than-expected New Zealand consumer confidence data published by ANZ, which came in at a seven-year low of -2.1% in Nov m/m.

Also, hopes of the US tax reform plan to be passed by the House Republicans later today lifted the sentiment around the US dollar, collaborating to the downside in the major. Attention now turns towards the US data flow for fresh impetus ahead of the US tax vote.

NZD/USD Levels to consider

The NZD tests 0.6850/45 (psychological levels/ Nov 14 low), below which 0.6818 (multi-month lows) and 0.6800 (key support) are key near-term downside areas. To the topside, a test of 0.6897/0.6900 (20-DMA/ round number) due on the cards, which could open doors towards 0.6919 (Nov 15 high).

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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