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  • NZD/USD keeps late-Friday pullback to stay beyond 21-day SMA for the third day in a row.
  • New Zealand’s Visitor Arrivals recovered in July, Business NZ PSI shrank in August.
  • News that ByteDance rejects Microsoft’s offer for TikTok fails to tame the risk amid vaccine hopes.
  • Sino-American tension, Brexit join fears of RBNZ’s rate cut to question the bulls.

NZD/USD refreshes intraday high to 0.6690 ahead of Monday’s Tokyo open. In doing so, the Kiwi pair takes clues from the gains of S&P 500 Futures while ignoring risk-negative headlines. The reason could be traced from a lack of major catalysts as well as anticipated preparations for the Reserve Bank of New Zealand’s (RBNZ) rate cut.

Buy of rumors, sell on news…

Rumors that Oracle won the bidding for TikTok seems to favor the S&P 500 Futures, up 0.80% now, following no market reaction to the news that ByteDance turned down Microsoft’s bid for the video-sharing app. Also on the positive side could be hopes of the early vaccine for the coronavirus (COVID-19), as triggered by the restart of AstraZeneca’s trials. Additionally, the European Central Bank policymakers’ (ECB) comments suggesting further easy money added strength to the equity future derivative and helped restore market sentiment.

On the contrary, China’s retaliation to the US sanctions over the Hong Kong bill joins Brexit fears and uncertainty over the American stimulus to challenge the risk-tone sentiment.

Elsewhere, Bloomberg came out with the piece suggesting the RBNZ’s rate cut to take place in early 2021. “After rallying more than 20% from its March low, the currency is coming under pressure as traders bet the benchmark rate could drop below zero in the first few months of 2021. Economic growth and consumer confidence data due this week may help determine exactly when this will happen. Bets for more policy easing have gained traction after the Reserve Bank of Zealand reiterated earlier this month that it may deploy negative rates to support the economy.”

It should also be noted that New Zealand’s Visitor Arrivals in July recovered from -105.1% forecast to -98.5% whereas Business NZ PSI slipped into the contraction region, below 50 reading, in August versus 53.2 prior.

Moving on, traders will keep eyes on the risk catalysts amid a lack of major data/events during the day. On a weekly basis, Westpac’s Consumer Survey details for the third quarter (Q3), up for publishing on Tuesday, will precede Thursday’s second quarter (Q2) GDP data to direct the pair’s near-term move. On the other hand, Wednesday will be the key for the USD traders as it offers the Fed’s meeting and Retail Sales data from the world’s largest economy.

Technical analysis

A clear break of the monthly falling trend line, at 0.6667 now, becomes necessary for the bulls to carry the recent strength, failing to do so can recall 21-day SMA level of 0.6650 on the sellers’ radar.