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  • NZD/USD fails to stretch the bounce off 0.6536 beyond 0.6555, stays pressured near one-month low.
  • New Zealand’s Business NZ PMI grew from 56.3 to 58.8 in July.
  • The rise in US treasury yields joins Sino-American tussle and coronavirus woes in New Zealand to weigh on the quote.
  • China Industrial Production, Retail Sales will offer immediate direction, lockdown related announcements from Auckland will be watched afterward.

NZD/USD stays depressed near 0.6545 during the initial Asian session on Friday. The pair bears the burden of coronavirus (COVID-19) worries at home and the recent rise in the US Treasury yields to ignore the latest Business NZ PMI data for July.

Virus wave 2.0 dims Kiwi’s charm…

On Thursday, The Guardian quoted New Zealand’s (NZ) health chief, Dr. Bloomfield, to confirm that there 36 active cases in total. Following that NZ Prime Minister (PM) Jacinda Ardern noted that she expects the COVID-19 cluster to grow further before it slows. There is a cabinet meeting around 03:00 AM GMT which will release announcements on lockdown alert levels by 05:30 GMT, as per the Australia and New Zealand Banking Group (ANZ).

Other than the pandemic woes at home, RBNZ’s dovish stand and recently upbeat statistics from the US also exert downside burden on the pair. Furthermore, the US-China jitters and uncertainty surrounding America’s phase 4 stimulus additionally offer negative clues for the pair.

Market’s sentiment stays sluggish with the US 10-year Treasury yields recently gaining traction against Wall Street’s mildly negative performance. Even so, S&P 500 Futures rise 0.10% to 3,373 by the press time.

It’s worth mentioning that New Zealand’s Business NZ Manufacturing PMI data for July grew past-56.3 figures to 58.8 but failed to underpin the kiwi pair.

Moving on, likely upbeat prints of China’s Industrial Production and Retail Sales for July, expected to rise to 5.1% and 0.1% respectively versus 4.8% and -1.8%, are less likely to offer major upside to the pair unless being too optimistic. On the contrary, downbeat readings will exert additional pressure onto the pair. While noting this, ANZ said, “Risks to our outlook are now skewed firmly to the downside, with the Q3 rebound in activity likely to be weaker for it. How much weaker, and for how long, will depend on what follows. But even if we get more clarity on alert levels today, uncertainty around the economic implications will be extreme.”

Technical analysis

50-day EMA near 0.6520 gains immediate attention of the NZD/USD pair sellers ahead of 0.6500 round-figures. On the contrary, 0.6595-0.6600 area comprising 21-day EMA becomes nearby resistance to watch during the pair’s upside attempts.