- NZD / USD fades bounce off the 2021 low marked on Tuesday.
- New Zealand’s third-quarter terms of trade index fell below market expectations and previously China’s Caixin manufacturing PMI was at a three-month low.
- Yields fall, stocks show losses on the first case of Omicron in the United States, the hawkish game of Powell 2.0.
- Second-tier US data will offer intermediate moves ahead of Friday’s key US jobs report.
NZD / USD pulls back around short-term horizontal support near 0.6800, reversing the previous corrective pullback from the annual low.
That said, the Kiwi pair are struggling amid new woes of covid variants and hawkish concerns from the Fed as traders brace for Thursday in Asia.
In addition to risk catalysts, negative home trade data, unlike the stronger US economy, is also putting downward pressure on NZD / USD prices.
New Zealand’s terms of trade index stood at 0.7% for the third quarter of 2021, down from 2.0% expected and 3.3% previously. On the other hand, details of the US ADP employment development and ISM manufacturing PMI for November exceeded market consensus by 525K and 61.0 respectively to 534K and 61.1 in that order.
Given the firmer US data supporting the Fed’s hawkish view, Federal Reserve Chairman Jerome Powell reiterated his inflationary fears, but also said he still believed inflation would come “down”. significant “in the second half of 2022, during a testimony against a Senate committee.
It should be noted that the discovery of the first case of the South African variant of the coronavirus, dubbed Omicron in the United States, added to the mood at risk, following the initial rally of relief in the markets over comments from World Health Organization (WHO). The WHO has tried to calm problems with the virus with statements defending current vaccines and marking less severe impacts from the COVID-19 strain.
Amid those games, 10-year US Treasury yields fell 3.7 basis points (bps) to 1.40% as Wall Street benchmarks marked another negative day, despite a start. optimistic.
Looking ahead, a lack of data / major events and the pre-NFP lull could bore the markets. However, Australian trade figures and second tier US employment reports can keep traders entertained, not to mention Omicron headlines.
Failures to cross a fortnight long resistance line around 0.6860 join a stable RSI line to support the continuation of the downtrend. Adding to the upside filters the previous support line from November 12 and the 50% Fibonacci retracement of the last fall in mid-November, near 0.6930 at the latest.
On the flip side, a weekly horizontal line near 0.6800 may keep short-term sellers entertained ahead of the 0.6772 annual low. In an event that NZD / USD bears conquer the annual bottom, highs marked in July and October 2020 around 0.6725-15 will hold special attention.