NZD/USD bears on roll towards 0.6200, ignore RBNZ’s Orr, mixed NZ trade data

  • NZD/USD prints five-day downtrend to refresh two-week low.
  • RBNZ’s Orr shows readiness to go beyond “neutral rate” if needed.
  • New Zealand's trade deficit widened on YoY but eased on MoM, Imports-Exports rose during July.
  • Risk-aversion, hawkish Fedspeak favor US dollar amid a light calendar.

NZD/USD stands on slippery grounds during the five-day downtrend, refreshing a two-week low to 0.6225 during Friday’s Asian session. In doing so, the Kiwi pair fails to cheer hawkish comments from the Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr, as well as mixed trade numbers for New Zealand (NZ). The reason could be linked to broad US dollar strength amid firmer US data, hawkish Fedspeak and geopolitical/economic risks.

Early on Friday morning, RBNZ Governor Orr said that he wants the OCR unambiguously above neutral. The policymaker also stated that the domestic demand is running too fast, as well as labor resources are acutely scarce.

Elsewhere, New Zealand Trade Balance dropped to $-11.64B YoY versus $-10.94B prior while improving on MoM to $-1092M from $-1102M previous readings. Further, Imports grew to $7.77B from $7.38B whereas Exports rose to $6.68B compared to $6.27B prior.

On the other hand, the US Dollar Index (DXY) begins Friday on a firmer footing as it refreshes the monthly high around 107.70, up for the third consecutive day. Recently, Bloomberg came out with the news that Chinese President Xi Jinping and Russian President Vladimir Putin plan to attend a Group of 20 Summit to be held in Bali later this year, Indonesian President Joko Widodo said in an interview. The news also mentioned that it was the first time the leader of the world’s fourth-most populous nation confirmed both of them were planning to show up at the November summit. The news adds to the market’s anxiety and fears of more drama, which in turn contributed to the flight to safety and helped the DXY to refresh the monthly high after the release.

Talking about data, Philadelphia Fed Manufacturing Survey rallied to 6.2 for August versus -5 expected and -12.3 prior while the weekly Initial Jobless Claims dropped to 250K, below 265K market consensus and 252K revised prior.

That said, San Francisco Fed President Mary Daly mentioned that the (Fed) will continue to raise the rates to "right-size it." The policymaker added that either 50 basis points or a 75 basis points hike would be appropriate while signaling the move for the September rate decision. However, Minneapolis Federal Reserve Neel Kashkari mentioned that, per Reuters, he does not believe the county is currently in a recession. Further, the all-time hawk St. Louis Fed President James Bullard said he is leaning towards another 75 bps rate hike in September. “Trading in futures contracts tied to the Fed's policy rate suggested investors see that rate rising to a range of 3.50%-3.75% by March of next year, but then starting to fall a few months later,” said Reuters. That said, the current range of the Fed’s benchmark rates is 2.25-2.50%.

Additionally, pessimism surrounding China, as mentioned by Goldman Sachs and Nomura, joins the doubts over the People’s Bank of China’s (PBOC) capacity to tame recession woes to weigh on the Antipodeans.

Against this backdrop, Wall Street closed mixed and exert down pressure on the S&P 500 Futures, down 0.17% intraday at the latest. Further, the US 10-year Treasury yields reverse the previous day’s retreat from the monthly high to 2.891% by the press time.

Moving on, NZD/USD traders have little on the economic calendar to watch. However, risk catalysts will be crucial and can keep the Kiwi pair directed towards the monthly low.

Technical analysis

A daily closing below the one-month-old ascending support line, now resistance around 0.6280, directs AUD/USD bears towards the monthly low of 0.6195.

Additional important levels

Today last price 0.6232
Today Daily Change -0.0025
Today Daily Change % -0.40%
Today daily open 0.6257


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