- NZD/USD remains under pressure around the multi-day low.
- Sluggish consumer sentiment data adds to the previous weakness.
- Geopolitical/trade news and economic data from China, Australia and the US will be the key drives to watch.
With the recently released New Zealand (NZ) Westpac Consumer Survey result revisiting the year 2012 levels, NZD/USD remains on the back foot around 0.6340 at the start of Tuesday’s Asian trading session.
The Westpac Consumer Survey for the third quarter (Q3) slipped below 104.0 forecast and 103.5 prior to 103.1. “While households are more optimistic about their personal financial situation, they have become increasingly downbeat about the economic outlook more generally. – Despite the fall in borrowing rates in recent months, households are reluctant to spend and are instead focused on paying down debt,” says Westpac with the release.
The Kiwi pair has recently been declining as the US Dollar (USD) benefits from the market’s risk-off sentiment. The attack on Saudi Arabia, ripping nearly 50% of the country’s oil output off, became the latest and strong catalyst. Adding to the momentum was the US-EU tussle over the trade after World Trade Organization (WTO) ruled in favor of the US suit over the illegal subsidies granted to European aerospace Airbus, which in turn raises fears of the US announcing punitive tariffs to EU products for as much as $21billion.
Furthermore, China’s August month data-dump, comprising Retail Sales, Industrial Production and Fixed Asset Investment, could also be considered as a reason for the pair’s latest downpour.
The US-China trade relations get another goodwill gesture from China as it removes Soybean and Pork off its list for additional tariffs, paving the way for a good start of the trade talks in early October.
Having witnessed downbeat print of New Zealand’s Westpac Consumer Survey, investors could focus back to broader risk-off and the US Industrial Production for August, coupled with trade/political headlines, for the rest of the day. Also, housing data from China and Australia, followed by the Reserve Bank of Australia’s (RBA) monetary policy meeting minutes, will also be the key to watch.
The 21-day simple moving average (SMA) becomes an immediate upside barrier, near 0.6380, a break of which could trigger pullback towards 0.6410 and monthly top surrounding 0.6455. Alternatively, a break below month-start top of 0.6320 will set the tone for pair’s further declines towards 0.6270.