- NZD/USD struggles to keep Monday’s pullback gains from one-month low.
- New Zealand government extends mortgage scheme, wage subsidy to combat the virus.
- Upbeat performance of housing market, US dollar weakness supersede Sino-American tussle to favor the kiwi.
- No major data at home but RBA minutes and US housing numbers will decorate the calendar.
NZD/USD recedes to 0.6550 in the latest pullback from 0.6561 during the early Asian session on Tuesday. The kiwi pair bounced off July 14 bottom the previous day. However, the resulted gains took a U-turn from 0.6575 by the end of Monday’s North American session. While US dollar weakness earlier favored the Antipodeans, a lack of major data/events joins mostly silent news feeds to trigger the latest weakness in the quote.
Virus woes dominate…
Not before a fortnight, New Zealand was considered the fastest to overcome the coronavirus (COVID-19) first wave with no traces of another round and a strong economic recovery. However, the resurgence in the virus recently pushed policymakers to delay the general election and announce the extension of the previous measures like wage subsidies and related to mortgage favor. Elsewhere, the RBNZ adopted a dovish tone in its latest monetary policy but refrain from negative rates any sooner. Though, market players are less convinced with the ABS Bank anticipating a 0.25% rate cut in 2021.
On the contrary, receding pandemic data from the US becomes doubtful amid lesser testing. Even so, the US dollar remains on the back foot while inching closer to the 26-month low flashed earlier in the month. The reason could be traced from downbeat Empire State Manufacturing numbers and no clues of the much-awaited stimulus from the Congress.
It’s worth mentioning that the US and China remain at loggerheads and should have ideally weighed down the kiwi. In its latest crackdown, the Trump administration added 38 Huawei facilities to the US’ economic blacklist before arresting a former CIA agent as a working spy for China.
Market sentiment remains clueless with S&P 500 Futures up 0.20% to 3,386 but the US 10-year Treasury yields taking rounds to 0.68% without any major change.
Moving on, traders will keep eyes on the macros amid a lighter calendar ahead of the US session wherein housing data can offer minor moves.
Technical analysis
Failures to cross August 03 low near 0.6575 pulls the quote back toward a 50-day EMA level of 0.6523. However, bearish MACD suggests further downside directed to July 14 low around 0.6500.
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