- Fears of additional US tariffs on China hurts antipodeans.
- Broad USD weakness helps pair limit its losses.
- Trade deficit in the U.S. narrows in April.
After advancing to its highest level since later April at 0.6665, the NZD/USD pair struggled to build on its gains and spent the day in a relatively tight range on Thursday. As of writing, the pair was up 11 pips on a daily basis at 0.6629.
Although the greenback came under renewed bearish pressure in the second half of the day, the pair remained stuck in its range with the latest headlines surrounding the U.S.-China trade conflict making it difficult for the antipodeans such as the kiwi find demand.
While speaking to reporters in France earlier today, U.S. President Trump said that he will decide whether to impose tariffs on an additional $300 billion worth of Chinese goods after the G20 summit. Later in the session, the Chinese news outlet South China Morning Post claimed that Trump was preparing to announce tariffs on all Chinese imports after G20.
Meanwhile, today’s data from the U.S. showed that the trade deficit in April declined to $50.8 billion from $51.9 billion in March. On a negative note, unit labour costs in the first quarter declined by 1.6% to hint at soft wage inflation and weighed on the greenback. As of writing, the US Dollar Index was down 0.25% on the day at 97.05.
There won’t be any macroeconomic data releases from New Zealand on Friday and China will be on holiday. The NFP report from the U.S. will be the last significant catalyst ahead of the weekend.
“While we expect jobs growth to slow this time, we think this is likely to be caused more by supply constraints than by weaker demand. These shortages are continuing to put upward pressure on wages, which is one of the reasons we think markets are getting a bit ahead of themselves in pricing in a series of rate cuts in the immediate future,” ING analysts said previewing the data.
Technical levels to watch for
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