- NZD/USD remains modestly changed despite the heavy drop in New Zealand’s Q2 Retail Sales.
- Virus woes, greenback strength keep the quote pressured, RBNZ policymakers also turn bearish.
- Vaccine hopes limit the losses but Sino-American tension probe the optimism.
- NZ PM Ardern’s speech will be in the spotlight ahead of the US session.
NZD/USD seesaws around 0.6540 amid the initial Asian session on Monday. The kiwi pair recently ignored New Zealand’s second quarter (Q2) Retail Sales data as RBNZ has also shown its bearish bias and the data stay near marked forecast.
New Zealand headline Retail Sales ex-inflation slumped 14.6% versus -0.7% prior figures during the Q2 of 2020.
Read more: New Zealand Retail Sales beats expectations by 0.4%, Kiwi unchanged on the data
Another favor for the RBNZ?
With the data matching wide marked expectations due to the coronavirus (COVID-19), the RBNZ policymakers have an additional reason to cheer their recent bearish bias. On Friday, the Reserve Bank of New Zealand (RBNZ) Chief Economist Yuong Ha said, “Negative rate decision contingent on the health of the economy; if and when the time comes we have those tool available.” Before that, the RBNZ stretched the term lending from three to five years whereas New Zealand’s Finance Minister Grant Robertson announced an increase in limits for business loans from New Zealand dollar 500,000 to 5 million. With all those activities to combat the pandemic, the Pacific is still struggling with the deadly virus wave 2.0 that can weigh on the NZD/USD pair especially when the US is gradually recovering.
On the contrary, virus cases have mostly been stabilized in the US and President Donald Trump has been selling the vaccine hopes off-late. Also, American economics has been positive and eases the pressure off the Federal Reserve policymakers. As a result, the US dollar index (DXY) manages to recover from 27-month low despite looming uncertainties over the COVID-19 aid package.
Talking about the US-China trade relations, US President Trump’s latest comments suggest the decoupling of the world’s largest economy from China. Even so, policymakers at both the ends remain hopeful of talking the phase-one deal, which in turn defies the pessimism.
Amid all these catalysts, market sentiment remains positive with S&P 500 Futures gaining over 0.20% to 3,398 after Wall Street benchmark flashed the biggest run of 2020 with a four-week winning streak.
It’s worth mentioning that Auckland is under level 03 lockdown restrictions and Prime Minister Jacinda Ardern is up for announcing the same on Monday. The event will be widely watched amid the latest increase in virus cases from New Zealand.
Technical analysis
The pair’s repeated bounces off 50-day EMA, currently around 0.6530, keep the bears away. Also adding to the support is the 0.6500 threshold. On the contrary, a downward sloping trend line from July 31, at 0.6630 now, becomes the key upside barrier.
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