- Resurfacing US-China trade war fears added to the recent bearish pressure.
- Risk-aversion trade further drove flows away from perceived riskier currencies.
- The ongoing USD pullback did little to lend support ahead of the US jobs report.
The NZD/USD pair added to its recent heavy losses and continued losing ground through the mid-European session on Friday, hitting fresh six-week lows, around the 0.6525-20 region in the last hour.
The pair extended its recent sharp pullback from three-month tops and failed to gain any respite from resurfacing fears of a full-blown US-China trade war, especially after the US President Donald Trump on Thursday announced to impose additional 10% tariffs on the remaining $300 billion worth of Chinese imports from Sept. 1.
The negative trade-related development rattled global financial markets – evident from a sea of red across equity markets, which further collaborated towards driving flows away from perceived riskier currencies – like the Kiwi, with a follow-through US Dollar pullback from two-year tops also doing little to stall the ongoing downfall.
With investors looking past a hawkish rate cut by the Fed, a sharp slide in the US Treasury bond yields – primarily on the back of global flight to safety, seemed to be one of the key factors prompting USD long-unwinding trade, albeit failed to impress the bulls or lend any support to the major ahead of Friday’s important release of the US monthly jobs report.
The headline NFP is expected to show that the US economy added 164K new jobs in July, down from the previous month’s stellar reading of 224K, and the unemployment rate is seen holding steady at 3.7%. Meanwhile, average hourly earnings are foreseen to post modest growth of 0.2% on a monthly basis, with the yearly rate ticking higher to 3.2% from 3.1% previous.
Technical levels to watch