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  • NZD/USD fell to fresh multi-week lows on Friday.
  • US Dollar Index recovers toward 100.50 following an early drop.
  • Retail Sales and Industrial Production in US fell at a record pace in April.

After staying relatively quiet near 0.6000 during the Asian trading hours, the NZD/USD pair came under strong bearish pressure and fell to a three week low of 0.5921.

With the markets turning subdues, the pair has gone into a consolidation phase in the last hour and was last seen down 1.13% on the day at 0.5933. On a weekly basis, the pair is down around 80 pips and remains on track to register its lowest weekly close since the last week of March.

Earlier in the day, heightened US-China tensions weighed on the China-proxy kiwi. The US Commerce Department announced that it has banned Huawei from purchasing semiconductors from certain US manufacturers. Responding to that development, Global Times’ editor claimed that China could restrict or investigate US companies such as Qualcomm, Cisco and Apple and suspend the purchase of Boeing airplanes.

USD gathers strength after mixed US data

In the second half of the day, the data from the US showed that Retail Sales and Industrial Production in April declined by 16.4% and 11.2%, respectively. Both of these figures were the largest-ever recorded monthly declines in these data. 

Finally, the University of Michigan’s Consumer Sentiment Index, surprisingly, recovered modestly to 73.7 in May from 71.8 in April.

Commenting on the Retail Sales data, “with lockdowns starting to be lifted and many parts of the country beginning to re-open, April could very well be the bottom for many retailers, meaning sales should begin to recover in May,” said Wells Fargo analyst.

Although the US Dollar Index edged lower during the early trading hours of the American session, it didn’t have a difficult time recovering its losses. At the moment, the index is up 0.15% on the day at 100.42 and looks to gain more than 1% for the week.

Technical levels to watch for