NZD/USD bears waiting to pounce while price below 21-DMA

• We are steady in the open but we could have some liquidity back in the game with China returning.
• Price action to pick up with angst around trade talks and US data later on in the week.

NZD/USD slipped from 0.6320 to 0.6285 and is resting on the 200-hour moving average in early Asia.  Overnight, the US Dollar had been a weight while trade talk sentiment played its part in the bird’s decline as well.  

“A rise in risk aversion saw the kiwi struggle to maintain lift overnight. The USD firmed, as did other safe-haven currencies, as Chinese officials suggested they were reluctant to agree a broad trade deal with the US. Expect trade headlines to drive the kiwi today,”

analysts at Westpac explained.  

Day ahead:

Today, we could have some liquidity back in the game with China and Hong Kong back in to play although, with so much angst around trade talks that will not commence until later on in the week, and given the amount of critical US data on tap as well, traders may prefer to take a back seat for today’s session.  

As for second-tier US data coming up, the market expects producer prices to advance 0.1% m/m, keeping the annual rate unchanged at 1.8% for a second consecutive month in September. “Similarly, excluding food and energy, producer prices should have remained unchanged at 2.3% y/y on the back of a stronger 0.2% m/m gain. Separately, the consensus is looking for a small retreat in the NFIB Small Business Optimism index for September, stringing its second consecutive decline to 102.0 from 103.1 in August,” analysts at TD Securities explained.  

NZD/USD levels

Meanwhile, the trend stays  bearish on the daily charts. The   21-DMA is a resistance while bears are embarking on a test below the lowest levels since 2015 having already pierced the 61.8% Fibonacci retracement level of the GFC lows in 2009 to recovery double top highs in 2011  and 2014.