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  • NZD/USD shows a little reaction to upbeat NZ trade data, FOMC.
  • Fears of China’s coronavirus outbreak to weigh on New Zealand exports dominate.
  • US GDP and news headlines can entertain traders ahead of next week’s key employment data from New Zealand.

NZD/USD registers a mild loss of 0.07%, to 0.6525/20, amid Thursday’s Asian session. The pair recently ignored upbeat New Zealand (NZ) trade numbers as well as the bearish outlook of the US Federal Reserve. The reason could be traced to the likely negative impacts of coronavirus on New Zealand fundamentals due to its trade proximity with China.

China recently became the major market for New Zealand dairy and meat products. In this regard, the latest report from the Australia and New Zealand Banking Group (ANZ) said, China continues to account for an increasing share of export revenue (up 21% y/y). Dairy and meat exports rose (11.5% q/q and 12.7%) on the back of higher volumes and prices.

The latest list of coronavirus affected confirmed case suggest the toll rises to 7,711 from 41 on January 17 whereas there have been nearly 170 deaths, all in China, due to the same.

With this, the US, the UK and Canada have already taken down some/most of their airlines to and from China whereas rest of the world and top-tier businesses having links to Beijing are also thinking in that direction. Additionally, the White House policymakers keep the head high in front of China and deny scaling back tariffs even if the virus epidemic hurts the dragon nation’s growth.

While portraying the risk-off, the US 10-year treasury yields dropped to the fresh low since October 09, around 1.58%, by the press time.

On the economic front, New Zealand’s December month Trade Balance (YoY) came in better than upwardly revised $-4.85B (from $-4.82B) to $-4.31B. Ahead of that, the US Federal Reserve kept its monetary policy unchanged with 1.50-1.75% target range for the benchmark rate. Even so, Chairman Jerome Powell didn’t refrain from citing downside risks to manufacturing.

Market players are now gearing up for the preliminary reading of the US fourth quarter (Q4) GDP that is expected to remain unchanged at 2.1%. More importantly, investors will wait for next Tuesday’s employment data from New Zealand to better forecast RBNZ moves as the recent data have been mostly upbeat.

Technical Analysis

200-day SMA offers immediate support around 0.6510 while 0.6555 and 0.6580 can cap the near-term recovery ahead of highlighting a 21-day SMA level of 0.6611.