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  • NZD/USD keeps bearing the burden of the US Dollar Strength, trade war uncertainty.
  • The greenback benefits from the safe-haven demand, upbeat data.
  • US-China tussle continues with the White House officials reportedly discussing ways to limits portfolio flows to China.

As a reaction the latest trade-negative headlines from the US, the NZD/USD pair remains on the back foot while taking rounds to 0.6290 at the start of week’s trading on Monday.

Raising the bars for a successful US-China trade meeting, up for October 10-11, is the Bloomberg news that says the White House officials are considering ways to limit portfolio flows to china. The measures may include delisting of Chinese companies from US stock exchanges and applying limits to the exposure of US funds to the Chinese market. However, the US Treasury department refrained from supporting any such speculations while saying that it is not contemplating any such measures at this time.

Following the news, Chinese diplomat Wang Yi retaliated with the harsh statements, as usual, saying that China opposes hegemonism or bullying in international affairs. However, he re-confirmed the Washington visit and hoped to have a positive solution.

The Kiwi pair has been bearing the burden of the trade war between the United States (US) and China, not to forget dovish bias of the Reserve Bank of New Zealand (RBNZ). Though, the RBNZ’s latest comments turned down scope of using “unconventional tools”.

On the other hand, the US Dollar (USD) keeps its head high amid the geopolitical tensions concerning the US President Donald Trump’s likely impeachment and the on-going trade war. It should also be noted that recent economic statistics from the US have been positive while undersubscribed repo auction by the Federal Reserve System (Fed) keeps the upside limited.

Looking forward, a slew of second-tier data from New Zealand (NZ), including August month’s seasonally adjusted Building Permits, expected -2.7% versus -1.3%, followed by ANZ Activity Outlook and Business Confidence for September, could entertain Kiwi traders ahead of the all-important China Purchasing Managers’ Index (PMI) details for September and Caixin Manufacturing PMI for China.

The Australia and New Zealand Banking Group’s (ANZ) Activity Outlook is likely to weaken to -3.5% from -0.5% prior while Business Confidence could slump further to -58.5 from -52.3 earlier. China’s NBS Manufacturing PMI might improve to 49.7 versus 49.5 with its Caixin counterpart bearing forecasts of 50.2 versus 50.4 earlier. Also, the Non-Manufacturing PMI could rise to 54.2 from 53.8.

Although a slight improvement is expected in Chinese data, overall weakness in statistics prevails and the same could weigh on the Kiwi pair unless registering upbeat numbers.

Technical Analysis

While 21-day simple moving average (SMA) around 0.6340 acts as an immediate upside barrier, an upward sloping trend-line connecting recent lows at 0.6270 seems nearby support ahead of highlighting the monthly bottom surrounding 0.6250.