- NZD/USD sellers catch a breath after declining heavily from 100-day SMA.
- China’s recent demands seem to negatively affect the risk-tone when markets turn active.
- New Zealand ANZ Commodity Prices, China Caixin Services PMI and RBA in the spotlight.
Following its U-turn from 100-day SMA, NZD/USD bears catch a breath around 0.6400 at the start of Tuesday’s Asian session.
The Kiwi failed to enjoy the market’s risk-on momentum as traders turned to the equities and to the US Dollar (USD) amid broadly positive headlines concerning the US-China trade deal. Not only the United States (US) President Donald Trump’s trade positive comments but the US Trade Secretary’s “practically completed” statement on the “phase one” deal initially pleased trade watchers. Adding to the market sentiment was China’s readiness to forward President Xi Jinping for signing the deal in the US.
“Kiwi found resistance at a familiar level and faded despite positive trade headlines fuelling a risk-on session. A broadly firmer USD also limited the upside for the kiwi,” said the Australia and New Zealand Banking Group (ANZ).
The USD shrugged off downbeat Factory Orders while marking overall strength amid a light economic calendar.
While Wednesday’s third-quarter (Q3) employment data from New Zealand (NZ) and the next week’s monetary policy meeting by the Reserve Bank of New Zealand (RBNZ) seems to become the key, investors will also follow second-tier data from NZ and China for immediate directions. Among them, ANZ Commodity Price Index for October, expected 0.2% versus 0.0% prior, will be the first one to watch ahead of China’s Caixin Services Purchasing Managers’ Index (PMI) for the previous month. Having witnessed an upbeat print from Caixin Manufacturing PMI, Antipodeans will cheer Services PMI if matching 52.8 forecasts versus 51.3 prior.
It should also be noted that monetary policy meeting by the Reserve Bank of Australia (RBA) will also affect the Kiwi as Australia is the largest customer to NZ. Even if the Aussie central bank is widely anticipated to hold its current policy unchanged, any signals to economic challenges could be price negative for the pair.
Technical Analysis
Pair’s pullback from 10-day Simple Moving Average (SMA) seems to portray a short-term rising wedge bearish formation on the chart. The same get confirmation if the quote declines below 0.6370 support, which in turn can recall 0.6200 on the chart. However, 0.6330 and 0.6300 could act as the key supports during the declines. On the upside, pair’s break above 100-day SMA level of 0.6463 needs to be backed by a sustained closing above the rising wedge’s resistance line, at 0.6470, in order to challenge August 09 high near 0.6500.
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