NZD/USD remains on hunt for break above 0.62 after China Industrial Profits data

• NZD/USD remains near 0.62, having breached key trendline hurdle on Tuesday. 
• China’s Industrial Profits fell in April, albeit at much slower rate compared to March. 
• Escalating US-China tensions could weigh over risk sentiment and hurt the NZD.

NZD/USD is eyeing a clear break above the psychological hurdle of 0.62, having found bids near 0.6179 in early Asia and violated the resistance of the trendline falling from Jan. 2 and March 9 highs on Tuesday. 

China’s Industrial Profits fell by 4.3% year-on-year in April following the 34.9% slump in March, the data released at 01:30 GMT showed. So far, the data has not had any notable impact on NZD, leaving the NZD/USD pair largely unaffected above 0.6190.

If anything, it could only strengthen the bid tone around the pro-risk NZD, as the sharp deceleration in the decline in corporate profits indicates that the world’s second-largest economy regained some poise in April. The economic activity contracted sharply in the first quarter due to the coronavirus outbreak. 

The broader market sentiment is also supportive of gains in the NZD. The futures on the S&P 500 are currently reporting 0.25% gains. The index rallied by 1.23% on Tuesday. 

The only cause for concern for the bulls right now is the escalating tensions between the US and China. US Senator Rubio put out a tweet early Wednesday, warning that the US would be left with no option but to impose sanctions on China if the dragon nation passes the Hong Kong security bill. The US and China have recently been embroiled in a war of words with the former accusing the latter of allowing the coronavirus to spread across the globe.  

Technical levels