NZD/USD tracks CNY sell-off, weakest since January 2016

• NZD/USD drops to multi-year low after the latest headlines from China triggered risk-off.
• Manufacturing PMIs will offer intermediate moves ahead of the key central bank leaders’ speech at the Jackson Hole Symposium.

With China’s onshore Yuan (CNY) plummeting to more than a decade low against the US Dollar (USD), NZD/USD follows the suit with a drop to 0.6371, the fresh bottom since January 2016, ahead of the Europe session on Thursday.

The USD/CNY pair surged to the highest since March 2008 as Xinhua quotes China’s Foreign Ministry Spokesman Geng Shuang  while showing readiness to impose sanctions on the US for arms sales to Taiwan. The SCMP headlines arguing against the US terming China as a currency manipulator could also be considered fuelling the rally.

With this, Asian equities remain weakened further whereas the US 10-year Treasury yield falls back to 1.576% by the press time.

Earlier, the USD’s across the board surge on the back of the Federal Open Market Committee (FOMC) minutes weakened the pair.

Lesser than expected Nikkei Manufacturing PMI from Japan and pessimism statement from German Finance Ministry set the tone for bearish consensus relating to activity numbers for Germany, Eurozone and the US.

Other than trade news and August month manufacturing indices, investors will remain largely on the sidelines ahead of the key Jackson Hole Symposium as it will offer a stage to global central bankers to convey their future monetary policy outlook.

Technical Analysis

Unless rising back beyond September 2018 low surrounding 0.6425, bears can keep targeting the year 2016 low of 0.6348.