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  • NZD/USD sellers attack intraday low, defy previous three-day uptrend after China data.
  • China’s CPI, PPI dropped below forecasts on YoY during January.
  • RBNZ’s Orr said covid risks still around, concerned about housing market.
  • The market mood stays cautiously optimistic ahead of US inflation data, stimulus.

NZD/USD justifies weakness in China’s inflation figures while extending the initial losses following comments from Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr during the early Wednesday. In doing so, the kiwi pair holds lower ground near the day’s low of 0.7220 while snapping the three-day rise.

China’s Consumer Price Index (CPI) weakened more than 0.0% expected to -0.3% whereas the Producers Price Index (PPI) eased below 0.4% market consensus to 0.3% YoY in January.

Read: Chinese CPI Jan arrives lower than expected, -0.3% YoY vs 0.0%

The data joins the latest downbeat economic signals from the world’s largest commodity user, also New Zealand’s major customer, which in turn weigh on the NZD/USD prices.

As a result, the kiwi pair stretches the early Asian session’s weakness that took clues from RBNZ Governor Orr. Even as New Zealand’s recent inflation data have been upbeat, not to forget strong employment figures, the RBNZ boss didn’t rule out the coronavirus (COVID-19) risks while also praising the moves to control housing market loans via the Loan-To-Value ratios.

Read: RBNZ’s Orr defends LVR restrictions, cites lengthy and difficult recovery, Kiwi stays firm

Elsewhere, market risks remain mildly positive as traders await the US stimulus while debate continues in the Congress. Also important are the latest positive developments over the covid vaccines and chatters surrounding trade-tier among the western countries.

Against this backdrop, S&P 500 Futures rise 0.25% but stocks in Asia-Pacific trade mixed. Further, the US 10-year Treasury yields remain positive near March 2020 highs after declining the previous day.

Looking forward, updates on the much-awaited US covid relief package and the US CPI data will precede a speech from the Fed Chairman Jerome Powell to keep entertaining the NZD/USD traders.

Read: US Consumer Price Index January Preview: Can consumer demand spur prices?

Technical analysis

An ascending trend line from January 11 guards the quote’s immediate upside around 0.7260. However, NZD/USD bears may wait for a clear downside break of a seven-week-old support line, at 0.7130 now, for fresh entries.