- NZD/USD eases back from 0.6945 while trying to defend the early-US session low near 0.6910.
- US COVID-19 updates dim good news from vaccine front, hopes of economic recovery.
- Auckland’s ability to defeat the virus joins RBNZ’s upbeat sentiment to favor kiwi.
- Aussie employment data can offer immediate direction, covid news are the key.
NZD/USD retraces from the multi-month high, refreshed the previous day, while recently declining 0.6920 amid the early Asian session on Thursday. The quote’s latest pullback portrays the shift in market sentiment after American news for the coronavirus (COVID-19) poured cold water on the face of the earlier vaccine hopes. Also helping the pair were expectations of a strong economic recovery considering New Zealand’s victory against the virus as well as the RBNZ’s refrain from negative rates.
Virus woes, China headlines weigh on risks…
Not only the fresh activity restrictions in New York but a daily record high of the COVID-19 cases also challenged the market’s earlier optimism. Pfizer matched Moderna’s near 95% effective rate and fuelled expectations that the world will soon be getting a strong cure for the deadly virus. Additionally supporting the kiwi bulls were welcome data from the US housing market and the Reserve Bank of New Zealand’s (RBNZ) refrain from negative rates, not to forget the nation’s capacity to stay least infected, also get back to business, from the covid.
However, the latest challenges to China, mainly from the US passage of resolutions attacking the anti-human rights movement in Tibet and Hong Kong, as well as Australia’s tussle with Beijing, challenge the NZD/USD buyers.
Against this backdrop, the Wall Street benchmark closed in negative with the last hour drop whereas the US 10-year Treasury yields revisit the 0.87% mark following the latest weakness.
Looking forward, a lack of major data/event at home will direct the NZD/USD traders towards watching the key employment data from the largest customer Australia. Though, COVID-19 updates and news concerning China will be the key to watch.
Technical analysis
Overbought RSI conditions probe NZD/USD bulls around the late-2018 top near 0.6970, a break of which will highlight the 0.7000 psychological magnet. Meanwhile, the monthly support line, currently around 0.6900, becomes crucial to watch for the sellers.
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