NZD/USD drops 1 big figure, weaker Yuan fix weighs

The NZD/USD pair ran through fresh offers in the Asian session so far, unable to sustain the post-Brexit recovery above 0.71 handle, as the bulls were battered once again by poor Chinese data and a major Yuan devaluation.

NZD/USD breaches 20-DMA support at 0.7063

Currently, the NZD/USD pair sinks -1.11% to 0.7055, recovering slightly from fresh session lows of 0.7046. The Kiwi‘s recovery from post-Brexit troughs faltered ahead of 0.7150, sending the rate sharply lower below 0.71 handle, with the sell-off intensified by a sudden Chinese yuan devaluation. PBOC sets USD/CNY at 6.6375 vs 6.5776, which translates into the weaker fix (-0.9%) since the August 2015 devaluation of the Yuan. 

Additionally, a weaker Chinese industrial profits print released earlier on the day also weighed heavily on the sentiment surrounding the NZD. China is New Zealand’s top trading partner.

Meanwhile, the major finds support from higher Asian equities and better-than expected NZ trade balance figures. The NZ trade surplus expanded from a revised $326 million in April to $358 million last month, stronger than the market forecast of a $180 million surplus.

NZD/USD Levels to consider

To the upside, the next resistance is located at 0.7159 (post-Brexit high), above which it could extend gains to 0.7200 (round figure). To the downside immediate support might be located at 0.7000 (psychological levels) and from there to at 0.6974 (post-Brexit low).