- NZD/USD can’t ignore intensifying US-China trade war.
- The US President announced harsh measures in retaliation to China’s fresh tariffs.
- RBNZ’s Orr preferred “wait and watch” on Friday whereas Jackson Hole couldn’t tame the bears.
Following its upbeat closing on Friday, NZD/USD begins the week’s trading with a bearish gap to 0.6385 at the start of Asian trading on Monday.
Contrast to the Reserve bank of New Zealand’s (RBNZ) Governor Adrian Orr’s preference for the “wait and watch” approach after 50 basis points of the rate cut, the Federal Reserve Chairman Jerome Powell cited downside economic risk, mainly due to the trade frictions.
While the central bankers’ move justified Friday’s upside by the Kiwi pair, the aftermarket trade war between the US and China gives the reason for today’s gap-down.
In a response to China’s tariffs on $75 billion worth of the US goods, the US President not only increased tariffs rates on $550 billion of the dragon nation’s goods but also pushed the US companies to leave the Asian economy.
Additionally, the White House mentioned, as per the Bloomberg, that the US President Donald Trump regrets not levying higher tariffs on China when the Chinese media talked down his earlier comments on regret.
Investors will now keep a tab on New Zealand’s July month Trade Balance numbers that marked $-4.94 billion previous on YoY and $365 million on MoM basis. Further, US Chicago Fed National Activity Index and Durable Goods Orders for the previous month will also entertain calendar watchers. However, major attention will be on trade news.
While recent low surrounding 0.6360 can offer immediate support, any upside is termed ephemeral unless the pair crosses June month low of 0.6575.