- NZD/USD wavers around 0.7000 after Monday’s dull performance.
- New Zealand Building Permits marked heavies stop in 10 months in February.
- S&P 500 Futures print mild gains on stimulus, vaccine optimism but covid fears and Sino-American tussles weigh on mood.
- Traders await major data/events for fresh impulse, qualitative catalysts can entertain markets.
NZD/USD picks up bids to 0.7004, following its bounce off 0.6986, during the early Tuesday’s Asian session. Given the recent improvement in risks, Antipodeans try to offer a rosy day after a dull start to the week. However, mixed sentiment news concerning the coronavirus (COVID-19), vaccine and stimulus seem to restrict traders. Also challenging were downbeat data at home and the US-China tussles.
New Zealand Building Permits dropped way below 1.5% downwardly revised prior to -18.2% during February. The readings mark the steepest slump in the housing data after April 2020. The NZD/USD prices paid a little heed to the data, considering the New Zealand government’s move to cut down speculative moves in the housing sector earlier in March.
Also negative for the kiwi is the geopolitical tension between the US and China. Having been harshly criticized for forming a group with the UK, Canada and European Union (EU), by Beijing’s diplomat, the US is up for discussing Taiwan Strait with Japan, per Nikkei. This may push China to retaliate and weigh on the market sentiment.
Further, an alleged $20 billion hedge-fund force-sale and month-end positioning are also among the major negatives for the mood.
Alternatively, a $3.0 trillion infrastructure stimulus is having a mixed impact amid chatters of a tax hike whereas the US push for faster vaccinations and upbeat efficacy news from major vaccine producers favors the risk-on mood.
Against this backdrop, S&P 500 Futures cheers DJI30’s record closing to print 0.13% gains while the US 10-year Treasury yield and the US dollar index stay firmer.
Considering a lack of major data/events, traders will keep their eyes on how markets consolidate after the stellar up-move from November 2020 to February 2021. In doing so, risk catalysts will be the key ahead of Friday’s US employment jobs report.
Technical analysis
A “double-top” bearish formation around 0.7020 seems to guard short-term NZD/USD upside before highlighting the early-month lows near the 0.7100 threshold. Meanwhile, monthly bottom surrounding 0.6940 and 200-day SMA close to 0.6875 offer strong support.
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