- Renewed US-China trade uncertainty exerted some fresh pressure on Monday.
- Dismal data strengthened the case for RBNZ rate cut and added to the selling bias.
- Near-term oversold conditions extended some support and helped bounce off lows.
The NZD/USD pair remained depressed through the early North-American session, albeit has managed to rebound around 20-25 pips from multi-year lows set earlier this Monday.
The pair added to its recent losses and opened with a mild bearish gap at the start of a new trading week in reaction to renewed uncertainty over the US-China trade, which forced investors to move away from perceived riskier currencies – like the Kiwi.
Further weighed down by RBNZ rate cut speculations
It is worth mentioning that reports on Friday indicated that the US Administration was looking to restrict capital flows into China and de-list Chinese companies from the US exchanges, though the US Treasury officials denied any such plans.
This coupled with deepening political uncertainty in the United States, especially after the start of an impeachment inquiry against President Donald Trump, further weighed on investors’ sentiment and exerted some pressure on the major.
Meanwhile, the New Zealand Dollar was further weighed down by the disappointing release of ANZ Business Confidence Index, which fell to 11-1/2 year low in September and strengthened the case for a cut in interest rates by the RBNZ.
The pair dropped to as low as 0.6250 – levels not seen since September 2015 – but managed to find some support at lower levels. The uptick lacked any obvious catalyst and could be solely attributed to a technical bounce from near-term oversold conditions.
Hence, it will be prudent to wait for a sustained follow-through buying before confirming that a bottom has already been formed and positioning for any further near-term recovery as the focus now shifts to this week’s important US macro releases.
Technical levels to watch
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