- NZD/USD is consolidating the sharp fall that came of the US labour market report coming in at better than expected.
- Trade is a big risk for the Kiwi – Trump has announced another USD267bn in tariffs on China at short notice.
NZD/USD is consolidating the sharp fall that came of the US labour market report coming in at better than expected levels with average hourly earnings growing at 2.9% y/y – this was the fasted pace since May 2009.
NZD/USD fell from the 0.68 handle at the end of July and made its way down to 0.6544 before picking up demand back to 0.6726 on the dollar’s weakness where supply came back in thick and fast, cementing the argument for the downside.
“The NZD is likely to start this week in a similar vein to how it finished the last: on the back foot. While the market is still digesting the implications of the strong US wage growth numbers, the main focus is likely to be trade, as rhetoric ramps up further,” analysts at ANZ wrote.
“On the US-China dispute, Trump said in an impromptu interview on Friday that he is ready to go on another USD267bn in tariffs on China at short notice, in addition to the pending USD200bn. He added that they “were putting on the final touches” to the USD200bn announcement. Prior to these threats, China’s Ministry of Finance announced higher rebates to support exporters in the face of higher duties,” analysts at Nomura explained.
NZD/USD levels
We are at the lowest levels since Jan 2016 and en route back to the September 2015 levels down at 0.6289. However, there is room for consolidation with RSI on the weekly sticks turning up. Support is located at 0.6500 while resistance comes in at 0.6640.
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