NZD/USD renews monthly bottom below 0.6950 on fresh coronavirus woes in New Zealand
- NZD/USD extends previous day’s losses, pressured around one-month low of late.
- New Zealand reports highest daily covid infections in nearly a month, PM Ardern will decide for Auckland on Monday.
- Market sentiment dwindles amid mixed catalysts, firmer US Treasury yields.
- Fed tapering, China and US debt limit talks are the key to follow for fresh impulse.
NZD/USD drops the most among the G10 currency pairs, fails to cheer the market’s consolidation, during early Wednesday. In doing so, the Kiwi pair refreshes the monthly low around 0.6935 while extending the previous day’s downside, the heaviest during the week.
After easing the virus-led emergency alert level during the last week, New Zealand (NZ) Prime Minister Jacinda Ardern is forced to rethink her decision to ease the activity control measures in the capital Auckland. The reason could be linked to the month high COVID-19 daily cases of 45, all of them were from Auckland.
Elsewhere, US President Joe Biden’s canceled visit to Chicago to lead negotiations over his legislative agenda seems to underpin the cautious optimism after the Democrats failed to extend the debt ceiling. US Treasury Secretary Janet Yellen has already warned of empty pockets by October 18 if the bill couldn’t be passed by then, which in turn highlights the importance of the issue.
Furthermore, China’s waiver of Intellectual Property (IP) for covid vaccine battles the US push to Beijing, to cut oil imports from Iran, to probe the mildly optimistic sentiment in the market. Also challenging the risk appetite could be looming coupon payment of Evergrande and Fed tapering concerns.
Against this backdrop, S&P 500 Futures print 0.15% gains snapping a two-day fall whereas the US 10-year Treasury yields remain on the front foot for the fifth consecutive day around the 10-month top near 1.55% at the latest.
Although the Reserve Bank of New Zealand (RBNZ) policymakers have already signaled their wish to rate hike, highlight the next week’s monetary policy meeting for the NZD/USD traders, the latest covid fears may probe the hawks.
Ahead of that, Fedspeak and the second-tier US housing numbers may entertain traders but headlines concerning stimulus, debt limits and China will be important to watch for intermediate clues.
Technical analysis
Having broken monthly horizontal support, now resistance around 0.6985-90, NZD/USD is likely declining towards July’s low near 0.6880. However, RSI conditions may challenge the pair bears afterward.