- NZD/USD extends pullback from March 2019 high flashed the previous day.
- RBNZ Governor Orr doubts recovery hopes like Fed Chair Powell.
- Auckland marks fresh virus cases, New Zealand data stays mixed.
Despite recently bouncing off the intraday low of 0.6826 to now at 0.6834, NZD/USD stays heavy, down 0.10% on a day, during the early Friday’s trading. The pair refreshed the highest since late-March 2019 the previous day before taking a U-turn from 0.6915 to near 0.6840. While Fed Chair’s Jerome Powell’s cautious comments contributed to Thursday’s risk-off mood and weighed on the kiwi pair, the latest declines took clues from the Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr’s statements challenging the market optimism.
Powell stays ahead of the curve”¦
While global markets were busy cheering the coronavirus (COVID-19) vaccine hopes, Fed’s Powell doubted the complacency by citing lack of clarity over the economics even if the virus gets cured. Following the same tune, RBNZ’s Orr also mentioned the ‘big if’ on the economic recovery expectations while considering the recent rise in Auckland’s virus cases.
The New Zealand central banker’s economic worries supersede his comfort with the current monetary policy, which in turn dragging the NZD/USD prices further towards the south.
Other than the central bankers’ words, US-China tension also challenges the bulls. After initially warning China, indirectly, over the Hong Kong crackdown, the Trump administration is up for curtailing the US investments in Chinese companies. Beijing is one of the world’s largest commodity users and any negatives for the same heavy the Antipodeans.
Talking about the data, New Zealand’s Business NZ PMI for October grew past-46.6 forecast to 51.7 but the nation’s Food Price Index dropped below -0.2% market expectations to -0.7% in September, per the latest releases. On the other hand, October’s US inflation figures joined the weekly Jobless Claims to not offer any major positive surprise to the greenback traders.
Amid these plays, Wall Street benchmarks trimmed early-day losses while the US 10-year Treasury yields dropped over 10 basis points (bps) to revisit the sub-0.90% area.
Looking forward, a lack of major data/events will keep the traders directed to risk catalysts. This highlights a speech by Australian PM Scott Morisson, scheduled for release during Friday’s Asian session, which ABC News cites having clues for the vaccine, economy open.
Technical analysis
Unless declining below the 0.6800 mark, comprising September top, NZD/USD bulls are less likely to be disappointed.
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