NZD/USD: Depressed under 0.6500 amid risk reset
- NZD/USD seesaws between 0.6436 and 0.6450, mostly unchanged after New Zealand data.
- New Zealand’s Q1 Current Account figures flashed downbeat readings.
- The market’s risk-tone struggles to extend the previous optimism.
- A lack of major data/events could keep headlines concerning the US-China and virus on the driver’s seat.
NZD/USD pays a little heed to New Zealand’s first quarter (Q1) Current Account data while taking rounds to 0.6445 after the release. In doing so, the Kiwi pair keeps the small range between 0.6436 and 0.6450 during the early-Asian session on Wednesday.
New Zealand’s Q1 Current Account slipped beneath $1.482B to $0.721B whereas the Current Account-GDP Ratio dropped further below -2.7% forecast to -3.6% during the same period.
On Tuesday, the pair snapped two-day winning streak the previous day as the US dollar registered notable gains on Retail Sales. Also negatively affecting the quote could be fears of the coronavirus (COVID-19) resurgence amid tensed conditions in Beijing and escalating numbers from some of the US states.
Having initially cheered the market’s optimism due to the US Federal Reserve action on Tuesday, the Kiwi pair failed to confront the broad US dollar strength. The greenback managed to cheer the record percentage increase in Retail Sales while managing to overcome downbeat comments from Fed Chair Jerome Powell, during his testimony. In doing so, the quote also paid a little heed to stricter lockdown measures in Beijing and virus challenges in Florida and Texas.
As portraying the previous optimism, Wall Street benchmarks and the US 10-year Treasury yield printed gains. Though, the risk-on sentiment lost allure recently as worrisome headlines from North Korea and on India-China issue question the optimist. Also challenging the mood could be worsening situations in Beijing, with outbound travels on hold, as well as the highest numbers of new COVID-19 numbers from Japan since May 30.
It’s worth mentioning that upbeat comments from Dallas Fed President Robert Kaplan failed to get a major audience. Though, markets remained cautious as US Secretary of State Mike Pompeo heads to Hawaii with a target to meet Chinese diplomats. Against this backdrop, the S&P 500 Futures print mild losses of 0.20% to 3,110 by the press time.
Considering the lack of major data/events on the calendar, traders may keep eyes on the qualitative catalysts for fresh impulse. In doing so, US-China and virus updates might occupy the front rows.
Technical analysis
A clear break below the three-week-old support line, at 0.6440 becomes necessary for the pair to revisit a 200-day SMA level of 0.6320. Until then, odds of its pullback to 0.6500 can’t be ruled out.