- NZD/USD keeps bounces off 0.6538 to levitate near 0.6550.
- Easing of risk-on mood, sluggish equities stopped bulls from cheering upbeat GDT Price Index data.
- Coronavirus resurgence, geopolitical tensions become the key catalysts amid a light calendar.
NZD/USD seesaws around 0.6550 during the early Asian session on Wednesday. The kiwi pair took a U-turn from the early-June top, also the highest since late-January, on Tuesday. However, the bulls are refraining from leaving the ground and hence portraying choppy moves for the last few hours.
The underlying reason for the mixed performance after bears’ entry could be traced from the coronavirus (COVID-19) woes and escalation in the global tension surrounding China. The US virus cases crossed three million mark, the record high, whereas Los Angeles County marked the biggest daily increase, with 4,015 figures, during the previous day. Furthermore, Melbourne and cities nearby witnessed another lockdown, this time for six weeks, as pandemic continues to spread in the Pacific major.
On the other hand, US Secretary of State Mike Pompeo announced visa restrictions for some of the Chinese diplomats while also being in talks with other Trump administration members to undermine the Hong Kong dollar’s peg to punish the dragon nation, as per the Bloomberg. Further, Australia raised its travel warnings for the locals frequently visiting Beijing, per the Sydney Morning Herald. The news also states fears of arbitrary detaining of people as Canberra favored investigations into the virus outbreak. Additionally, the India-China and the London-Beijing tussles remain on the card and offer background music to the risk-off sentiment.
Against this backdrop, the US 10-year Treasury yields drop 4.4 basis points (bps) to revisit the multi-week low near 0.64%. Also, Wall Street witnessed a grim day but S&P 500 Futures mark 0.10% gains to 3,140 as we write.
Talking about the data, the US JOLTS Job Openings and New Zealand GDT Price Index both portrayed upbeat economic scenarios for the respective nations. However, bulls couldn’t break the wall of resistance around 0.6585 amid fresh fears.
Considering the lack of major data/events on the calendar, traders are likely to keep eyes on the qualitative catalysts, like virus updates and news concerning China, for fresh impetus. In doing so, the bulls may look for any positive support to aim for 0.6600 round-figures.
Unless breaking past-0.6580/85 resistance area, comprising June month’s top, buyers are less likely to aim for 0.6600 threshold, needless to mention about January 24 top near 0.6630.