- NZD/USD fails to capitalize on US-China trade truce.
- PMI data from China shows contraction in manufacturing sector.
- US Dollar Index posts small gains below 96.50 ahead of PMI data.
The NZD/USD pair started the week with a small bullish gap boosted by the U.S. and China deciding to make a cease-fire in trade talks to kick off a new round of negotiations. After advancing to its highest level since mid-April at 0.6730, however, the pair lost its traction as the disappointing data from China revived concerns over a slowdown in the world’s second-largest economy. As of writing, the pair was trading at 0.67, losing 0.25% on a daily basis.
Following the meeting with his Chinese counterpart Xi, U.S. President Trump on Saturday announced their decision to put tariffs on Chinese imports and said China would in return buy more farm products.
Assessing this weekend’s developments, “The agreement looks lopsided: China has returned to the negotiating table by committing to more farm goods purchases, which they likely already wanted to make,” said Westpac analysts.
“It also sounds a lot like the Buenos Aires G20 pledge in late 2018 which didn’t prevent the US administration this year from subsidizing US farmers hurt by the US-China trade war.”
Meanwhile, the data published from China showed that the business activity in the manufacturing sector continued to contract in June with the NBS Manufacturing PMI coming in at 49.4. Moreover, the Non-Manufacturing PMI ticked down to 54.2 in the same period to fall short of the market expectation of 54.5.
On the other hand, ahead of the ISM and the IHS Markit manufacturing PMI data from the U.S., the US Dollar Index is adding 0.28% on the day near 96.40, keeping the bearish pressure on the pair intact.
Technical levels to consider
Share
