- NZD/USD takes a U-turn from intraday high of 0.6553.
- New Zealand’s general election delayed from September 19 to October 17.
- US Congress to resume after calling one-month-long off the last week.
- Sino-American trade review pushed back without any clear dates.
NZD/USD drops to 0.6540 amid the early Monday morning in Asia. In doing so, the kiwi pair extends the pullback from the intraday peak surrounding 0.6555. While broad US dollar weakness could have prompted the pair buyers during the week-start move, news that New Zealand’s general election is delayed caused the recent fall in the pair. Additionally, news that the US-China trade talks have been postponed without any dates and the US House will reconvene exert additional downside burden on the pair.
Bears have many reasons…
Other than the recently announced general election, the US House Speaker Nancy Pelosi’s agreement to recall the Congress and pessimism surrounding the Sino-American trade/political relations also weigh on the pair. Further, the coronavirus (COVID-19) pandemic is gradually firming up its grip over the Pacific nation after 102 days of “no new cases”. Moving on, the RBNZ’s readiness to use unconventional monetary policy, as well as downbeat economic forecasts, adds to the NZD/USD pair’s weakness.
It should be noted that the recent data from New Zealand have been unimpressive as well. Recently, Business NZ PSI for July reprinted the upwardly revised 54.3 mark. On the other hand, the US Retail Sales flashed downbeat figures on Friday but the Industrial Production saved the day.
Amid all these plays, S&P 500 Futures print 0.12% gains to 3,367. In doing so, the risk barometer defers from the previous performance of the Wall Street benchmark.
Although the economic calendar is mostly silent in Asia, the US Empire State Manufacturing Index, expected 16.5 versus 17.2 prior, could entertain the short-term traders. It should, however, be noted that the return of the House becomes the US dollar-positive news and may become the reason for the bears to aim for sub-0.6500 area if the policymakers break the stimulus deadlock.
Technical analysis
50-day EMA level around 0.6520 becomes the short-term key support whereas buyers are less likely to enter unless witnessing a break beyond the early-month low near 0.6575.
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