- Bears fight back control amid risk-off, resurgent USD demand.
- Second coronavirus wave fears, mixed NZ data weigh.
- Next of relevance remains the Chinese activity numbers.
NZD/USD quickly surrendered the 0.6450 level and accelerated declines in early Asian trading, as a fresh risk-aversion wave gripped the markets and boosted the demand for the safe-haven US dollar at the expense of the higher-yielding currencies, such as the New Zealand dollar.
The spot, currently, trades at 0.6425, down 0.26% on a daily basis while recovering from a low of 0.6413. Despite the pullback, the kiwi remains offered on the back of the renewed fears over the intensifying spread of new coronavirus cases in the US and Japan. Markets continue to fret over the second wave, given the economic re-openings worldwide.
Further, mixed New Zealand (NZ) macro data also offers a little reprieve to the NZD bulls. NZ Food Price Index for May arrived at -0.8% MoM vs. 1.0% previous. Meanwhile, NZ May services PMI improved to 37.2 vs. 25.9 last.
Attention now turns towards the Chinese activity numbers, including the Retail Sales and Industrial Production, due later in the session at 0200 GMT for fresh trading impetus. In the meantime, the risk-off market mood and over 2% drop in oil prices will likely keep the risk currency, the kiwi, under pressure.
From a short technical perspective, the bears eye a convincing break below 0.6400 should the risk-off mood intensify. The next supports are aligned at 0.6393 (June 12 low) and 0.6321 (200-DMA). To the upside, any bounce could see the immediate resistances at 0.6469/71 (10 and 5-DMA) and 0.6500 (round number).
NZD/USD additional levels to watch
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