- Dismal NZ macro data exerted some initial downward pressure on the pair.
- Positive trade-related comments prompt some intraday short-covering move.
- The upside is likely to remain capped ahead of the prelim US Q2 GDP print.
The NZD/USD pair recovered around 40-pips from multi-year tops set earlier this Thursday and climbed to fresh session tops, around the 0.6345 region in the last hour.
The pair extended its recent bearish trajectory and dropped to challenge the 0.6300 round figure mark – the lowest level since September 2015 – in reaction to Thursday’s disappointing release of ANZ Business Confidence Index, which reaffirmed expectations of RBNZ rate cut in November.
Boosted by positive trade-related comments
However, extremely oversold conditions helped the pair to find decent support near the mentioned handle, rather prompted some intraday short-covering move. The uptick got an additional boost from upbeat trade-related comments from the Chinese Commerce Ministry spokesman.
China showed a willingness to resolve trade issues via a calm attitude, which eventually provided a strong boost to the global risk sentiment – as depicted by a solid up-move across global equity markets – and provided an additional boost to perceived riskier currencies – like the Kiwi.
Meanwhile, the US Dollar held on to its modest intraday gains, albeit struggled to gain any strong follow-through traction amid the recent inversion of the US bond yield curve and remained supportive of the pair’s goodish intraday recovery move.
It, however, remains to be seen if the pair is able to capitalize on the recovery move or the current bounce is still seen as a selling opportunity as the focus now shifts to the US economic docket – highlighting the release of a revised estimate of the US Q2 GDP growth figures.
Technical levels to watch
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