NZD/USD pops and drops below 0.6500 on downbeat New Zealand GDP
- NZD/USD refreshed intraday high and then turned south to revisit the pre-data levels.
- Trading sentiment remains sour amid fears of the coronavirus wave 2.0.
- Post-Brexit trade talks with the UK stand on the positive side amid downbeat concerns surrounding China.
- US data, pandemic updates will be the key for near-term direction.
NZD/USD trades around 0.6460, following the initial spike to 0.6481, during the early Thursday morning in Asia. The Kiwi pair recently rushed to refresh the intraday high after New Zealand’s GDP data. However, the gains couldn’t last as long as traders rechecked the figures.
New Zealand’s first quarter (Q1) Gross Domestic Product (GDP) shrank 1.6% versus -1.0% forecast and +0.5% prior on a quarterly basis. The yearly figures register a sharp run-down from 0.3% expected and 1.8% prior to -0.2%.
Following the news, the NZD/USD pair refreshed the intraday high to 0.6480, before declining back towards 0.6460 by the press time. The reason could be the outcome’s period that comprises the pre-lockdown time. Also, Statistics New Zealand has already signaled wide measurement gaps concerning the data. Additionally, traders are more interested in the coronavirus (COVID-19) updates, which have been downbeat off-late, than the economics ranging before the crisis.
Read: Breaking: New Zealand GDP contracts 1.6% QoQ in Q1, Kiwi pops and drops
Talking about the pandemic, the latest figures from Texas and Florida have been worrisome whereas Beijing stands strong to curb the spread with strict lockdown measures. New Zealand has also reported two cases and is also worries about its full-fledged economic restart. Elsewhere, numbers from Japan and Germany exerted an additional downside burden on the market’s risk-tone.
Furthermore, geopolitical tension amongst the Korean neighbors and between India and China, not to forget about doubts that Iran is secretively building nuclear weapons, also weighs on the trading sentiment.
Amid all these catalysts, the US equity benchmark offered mildly negative closing on Wednesday, with 10-year Treasury yields down to 0.73%. However, the S&P 500 Futures seem to take clues from the upbeat comments by Cleveland Federal Reserve President Loretta Mester and US Trade Representative (USTR) Robert Lighthizer.
Moving on, headline employment data from the key customer Australia might offer immediate direction to the Kiwi pair. Though, this doesn’t dim the prospects of risk catalysts to move the markets.
Technical analysis
An ascending trend line from May 26, at 0.6440 now, restricts the Kiwi pair’s immediate downside. Though, 0.6500 round-figure and the monthly top surrounding 0.6580 become the strong upside barriers.