NZD/USD trying to recover from a downside spike as China slashes Yuan exchange rate

• The Kiwi dipped on a surprise Yuan cut by China, but traders are scrambling to keep the day’s action near where it started.
• Friday is a thin showing for the NZD, and economic data is likely to be inconsequential as traders wrestle with swings in risk appetite.

The NZD/USD knocked back to 0.6720 in Asia trading for Friday after the People’s Bank of China (PBoC) devalued the Yuan with the largest single-day decrease since June of 2016, dragging the Antipodeans lower.

Following the PBOC’s severe cut to the Yuan, the Kiwi is trying to stage a rebound, lifting away from yesterday’s low of 0.6712 to trade near 0.6740, though bullish momentum remains limited for the NZD after late Thursday’s New Zealand Visitor Arrivals figures for June showed a -7.8% decline over the same period a year ago.

All that remains for the Kiwi for Friday data is y/y Credit  Card Spending figures for June, which last came in at 3.7%, but the low-tier figure is unlikely to drive much volatility into the pair as traders keep an eye on broader market sentiment, and try to position themselves ahead of the weekend.

NZD/USD Levels to watch

The Kiwi is struggling to shrug off yesterday’s declines amidst downward pressure on commodities having a profound effect on the NZD, keeping the New Zealand currency subdued, and as FXStreet’s own Ross Burland noted, “nearer term, the price has been unable to overcome 0.6760, resisted by the 21-hr SMA. From a fundamental perspective, there is a case for further supply into the bearish channel below 0.6720. 0.6920, however, would put the bulls back in control and bulls can target the June highs. The 200-month moving average resistance at 0.7007 is next key level.”