- NZD / USD consolidates its weekly gains after Tuesday’s weak performance.
- New Zealand’s trade deficit hits an all-time high, imports and exports increase in September.
- Market sentiment is weakening as the DXY remains firm despite lower Treasury yields, offering stocks slightly near the all-time high.
- Australian inflation figures, ANZ monthly sentiment data anticipate durable goods orders in the United States.
The NZD / USD remains under pressure around 0.7155 after the dismal New Zealand trade deficit publication, having reversed the uptrend towards 0.7200 the day before.
New Zealand’s (NZ) trade balance fell by more than $ 2,139 million (revised) before $ 2,171 million in September to mark the lowest MoM figures of all time. However, both imports and exports were better than their previous readings, with the former surpassing $ 6.495 billion to reach $ 6.57 billion, while the latter reaching $ 4.4 billion from $ 4.351 billion.
In addition to negative data from New Zealand, mixed market sentiment and the strength of the US dollar are also weighing on NZD / USD prices.
While hopes for the U.S. stimulus and Sino-U.S. Talks join fears of the coronavirus pullback to keep the market mood positive, strong U.S. data and caution ahead of the U.S.’s anticipated estimate for the GDP of the third quarter and Fed woes challenge optimists.
It should be noted that firmer earnings and recently positive US data has helped Wall Street benchmarks hold onto record highs, supported by lower 10-year US Treasury yields around 1.61 %. However, the US Dollar Index (DXY) refreshed its weekly high in the second consecutive daily rise, recovering from the monthly low, while pushing the 94.00 level at the end of Tuesday’s North American session. .
Turning to the data, U.S. CB consumer confidence unexpectedly rebounded in October, while September new home sales figures and the Richmond Fed manufacturing index for last month rose. also posted better figures than expected.
Having witnessed the initial reaction to the New Zealand trade figures, NZD / USD traders will pay attention to the Australian and New Zealand Banking Group (ANZ) monthly sentiment data for October ahead of the third quarter inflation figures for Australia. Thereafter, the durable goods orders in the United States for September could entertain the markets ahead of key US GDP figures, which will be released tomorrow.
Regarding Australian inflation and its impact on the NZD / USD, ANZ said, “While not directly related to the NZD, any surprises will impact the AUD and, by correlated association, the NZD. market fears: a big upside surprise like the one seen here last week. If that happened, the AUD would likely rise sharply, taking the NZD with it. “
The latest pullback in NZD / USD has yet to reverse the previous 5-day EMA rebound, which in turn directs the bulls to a four-month-old resistance line near 0.7220, but the Nearly overbought RSI conditions could call into question a further rise. On the contrary, a bearish breakout of the EMA’s immediate support, around 0.7150 at time of release, should trigger a short-term pullback targeting late September highs near 0.7090. However, the latest low of 0.7130 may act as an additional filter to the south.