- NZD/USD stays bid for the second-day in a row after posting biggest daily gains in over seven weeks.
- New Zealand PPI prints downbeat figures, traders cheer the broad risk-on sentiment.
- Fresh tension between Australia and China seems to offer breathing space to the bulls.
- Qualitative catalysts will dominate amid light calendar.
NZD/USD remains bid around 0.6040 during the early Asian session on Tuesday. The pair seems to follow the overall risk-on sentiment while also ignoring the recent Aussie-China tussle and downbeat New Zealand PPI data.
New Zealand’s first quarter (Q1) Producer Price Index Output and Input figures came in below market consensus of 0.7% and 0.2% to 0.1% and -0.3% respectively. Though, the pair traders seem to keep the previous day’s optimism.
In doing so, the kiwi traders also pay a little heed to the recently renewed Aussie-China tension after China confirmed 80% tariffs on Australian barley after banning meat from certain Aussie processors during last week. In response to the move, Aussie Agriculture Minister Simon Birmingham said that Australia is “deeply disappointing” and will consider going to the World Trade Organization on the issue.
Even so, S&P 500 Futures follow the footsteps of Wall Street and flash 0.25% gains to 2,952 by the press time. It’s worth mentioning that the US treasury yields and bunds registered notable gains during Monday’s upbeat sentiment.
On Monday, global markets cheered the upbeat news concerning further developments on the coronavirus (COVID-19) cure. The moves were also backed by increasing hopes of further stimulus from the global leaders as well as a surge in commodities amid expectations of China’s return to pre-virus status, as far as the demand for oil is concerned.
Given the lack of major data/events on the calendar, traders will keep eyes on the trade/virus updates for immediate direction.
Technical analysis
50-day EMA near 0.6075 offers an immediate resistance to the pair ahead of the descending trend line from December 31, 2019, at 0.6125 now. During the pair’s declines, 0.6000 acts as nearby support ahead of the monthly low near 0.5920.
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