NZD/USD: Vulnerable to refresh multi-month low towards 0.6800 on sour sentiment
- NZD/USD is up for the biggest weekly loss in 11 months as bears keep refreshing 2021 bottom.
- Spread of Delta covid variant overshadowed NZ PM Ardern’s efforts to placate bears.
- Mixed US data couldn’t stop DXY bulls from rising to nine-month high.
- PBOC rate decision, risk catalysts become the key catalysts.
NZD/USD seesaws around 0.6835 amid early Friday morning in Asia, following a four-day downtrend that leads it to a fresh low since November 2020.
While the RBNZ’s hawkish halt joins the covid woes at home to favor the bears, the US Dollar Index (DXY’s) jump to the fresh 2021 high on the market’s rush to risk safety, as well as on tapering concerns, adds to the downside pressure.
New Zealand reported 11 new covid cases versus the first on Tuesday whereas its largest trading partner Australia marked the record jump in daily infections the previous day. The faster spread of covid variant pushes the Asia–Pacific nations towards faster vaccinations but either a lack of resources or orders in the pipeline stops them to follow the likes of the US where policymakers are up for booster shots. Hence, the mixed jabbing pattern is strongly challenging the global economic growth, as portrayed by the latest economic analysis from Moody’s.
While the nation struggles with the Level 4 lockdown due to the coronavirus, Prime Minister Jacinda Ardern mentioned having found some traces that could help tame the covid outbreak. Though, the words didn’t matter much as the DXY rally that cheered a technical breakout, in addition to the rush to risk-safety, to renew the 2021 peak.
Talking about data, upbeat Aussie employment figures for July and a four-week downtrend in the US Jobless Claims, coupled with the softer US Philadelphia Fed Manufacturing Survey for August, couldn’t defy bears as the US Federal Reserve (Fed) policymakers indirectly assured tapering in the latest FOMC minutes.
Amid these plays, Wall Street closed mixed and the US 10-year Treasury yields dropped three basis points (bps) to 1.243% by the end of Thursday’s North American session.
Looking forward, COVID-19 updates will be the key to follow for fresh impulse whereas chatters relating to the government efforts to tame the pandemic, in 03:00 PM NZT update from PM Aredern, will also be important to watch. Additionally, US dollar moves and monetary policy decisions by the People’s Bank of China (PBOC) will decorate the calendar in Asia.
Technical analysis
A clear downside break of July’s low, near 0.6880, directs NZD/USD prices towards September 2020 peak surrounding the 0.6800 threshold.