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  • AUD/USD upsurge on RBA comments support NZD/USD.
  • Broad-based USD strength forces pair to stay in red.
  • Business activity in US manufacturing sector is expected to contract in August.

After spending the first day of the week in a very tight range near the 0.63 mark, the NZD/USD pair came under modest selling pressure during the Asian session and slumped to its lowest level since September 2015 at 0.6270. However, the pair was able to pull away from lows in the early trading hours of the European session and is now trading at 0.6290, still losing 0.25% on a daily basis.

Earlier today, the broad USD strength, reflected by the sharp upsurge witnessed in the US Dollar Index,  caused the pair to edge lower. Moreover, China filed a complaint against the 15% US tariffs on Chinese imports that went into effect on Sunday to suggest a further escalation in the trade conflict and weighed on antipodeans.

AUD/USD rebound helps Kiwi recover

However, toward the end of the Asian session, the Reserve Bank of Australia in its policy statement adopted a relatively optimistic tone about growth outlook and provided a boost to the AUD/USD pair, which helped the positively-correlated Kiwi to gain traction as well. “Looking forward, growth in Australia is expected to strengthen gradually to be around trend,” the RBA said.

Nevertheless, the US Dollar Index continues to float near the multi-year highs that it set earlier today and makes it difficult for the pair to make a meaningful recovery. Later in the session, the IHS Markit and the ISM will be both releasing their August manufacturing PMI data. The ANZ Commodity Price Index will be the only data release from New Zealand on Wednesday.

Key technical levels