“¢ Trump’s move to slap tariffs on Mexico triggers a fresh wave of global risk aversion trade.
“¢ Disappointing Chinese manufacturing data further dented the already weaker sentiment.
“¢ Tumbling US bond yields exert some pressure on the USD and helped limit deeper losses.
The NZD/USD pair held on to its weaker tone through the mid-European session and remained well within the striking distance of yearly lows set last week.
Having posted a session high level of 0.6527, the pair met with some fresh supply and turned lower for the fifth straight session in reaction to the US President Donald Trump’s unexpected move to slap tariffs on Mexican goods.
This coupled with reports that China has halted purchases of American soybeans and is ready with a plan to limit the rare earth exports to the US intensified fears over a global trade war and weighed on investors’ sentiment.
The already weaker global risk sentiment deteriorated further following the disappointing release of China’s official manufacturing PMI, which further drove flows away from perceived riskier currencies – like the Kiwi.
Meanwhile, the global flight to safety led to a free fall in the US Treasury bond yields, which exerted some downward pressure on the US Dollar and turned out to be the only factor that helped limit further downside, at least for now.
Moving ahead, today’s US economic docket – featuring the release of the core PCE price index, Chicago PMI and Revised UoM Consumer Sentiment, will now be looked upon for some trading impetus on the last day of the week.
Technical levels to watch
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