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  • NZD/USD fails to keep the post-data uptick to 0.6423.
  • New Zealand Trade Balance recovers from $-2.41B to $-1.33B in May.
  • Earthquake in New Zealand joins virus, trade wars to recently weigh on the kiwi pair.
  • RBNZ struck downbeat comments the previous day, risk catalysts in focus for now.

NZD/USD drops to the intraday low of 0.6404 during the early Asian session on Thursday. The quote’s recent weakness follows the initial uptick to 0.6423 on New Zealand’s May month trade figures. The reason for the declines could be traces to the overall grim market mood amid fears emanating from the global trade front as well as concerning the coronavirus (COVID-19).

New Zealand’s May month Trade Deficit shrank to NZD1.33 billion compared to April month’s NZD-2.441 billion, according to the latest Trade Balance data published by the Statistics NZ on Thursday. Though, the export figures are less disappointing.

Read: NZ annual Trade Deficit shrinks to NZD1.33 billion in May

While the initial reaction to the data was upbeat, risk-negative catalysts kept their dominance over the kiwi pair afterward. The surge in the pandemic data from the southern US states pushes the world’s largest economy towards another wave of the deadly virus’ spread. As per the CGTN news, “the US had its largest single-day total of new COVID-19 cases on Wednesday with over 36,000. The previous high was April 25 with 24,203.”

Other than the virus fears, the trade differences between the US and the European Union are likely to widen after the bloc warned the US for efforts to levy fresh tariffs on $3.1 billion worth of goods. Brussels has criticized US threats to hit $3.1 billion of European products with additional tariffs as ‘very damaging’, in the latest sign of growing transatlantic trade tensions, per the Financial Times.

Further, the US-China tension is also on the spike as the US Federal Bureau of Investigation (FBI) Director Christopher Wray warned that China is the most comprehensive threat to the US, in light of the cyber-theft, coronavirus mishandling, etc. Additionally, the US orders to look into the anti-dumping investigation against Asian tire manufacturers are an extra burden to the market’s risk-tone. It should also be noted that the International Monetary Fund’s (IMF) downbeat economic forecasts join the league of challenging factors to the trading sentiment.

Amid the downbeat concerning, Wall Street benchmarks saw the sea of red the previous day while S&P 500 Futures print 0.23% losses to 3,042 as we write.

Considering the lack of major data in the Asian session, updates concerning the global trade and virus outbreak will be the key for near-term trade direction. During the US session, Durable Goods Orders, Jobless Claims and Fedspeak could offer extra burden on the market watchers.

Technical analysis

The pair’s downside break of a 21-day SMA level of 0.6426 drags it to the monthly low near 0.6380. However, 200-day SMA, currently around 0.6325, could challenge the bears afterward. Meanwhile, bulls may await sustained trading past-0.6535 for fresh entries.