NZD/USD flirts with 0.6850 trendline support amid domestic data, trade talks
- Contradicting signals for the US-China trade deal and also for New Zealand economy seesaws the NZD/USD pair near a fortnight old support-line.
- FOMC and New Zealand GDP will be key to watch.
NZD/USD is trading near 0.6850 at the start of Asian sessions on Wednesday. The pair is close to two-week long ascending support-line amid mixed headlines from the US-China trade negotiations and domestic data. FOMC and New Zealand GDP will be key for pair traders.
Earlier during the day reports of China walking backward from some of the trade offers signaled lesser chances of the US-China trade deal and negatively affected antipodeans. However, the latest news that the US Treasury Secretary Steve Mnuchin and Trade Representative Robert Lighthizer heading next week to the dragon nation for further talks calmed the bears down.
At the domestic front, the GDT price index grew more than 0.1% forecast to 1.9% versus 3.3% prior whereas ASB revised their 2018/19 Fonterra milk price predictions upward by 35 cents. Fonterra is a dairy giant and contributes a major chunk to the Kiwi economy. Further, New Zealand current account balance for Q4 2018 grew lesser than the market consensus of $-3.56 billion to $-3.26 billion compared to $-6.15 billion prior while current account to GDP ratio improved to -3.7% against -3.9% expected and -3.6% previous quarter figure.
Traders will now be more cautious ahead of the week’s crucial event, i.e. the US Federal Reserve’s monetary policy meeting result at 18:00 GMT on Wednesday. The federal open market committee (FOMC) is expected to leave their monetary policy unchanged with 2.5% Fed rate. Though, forecasts concerning the downward revision to quarterly economics and likely chances of indicating only one rate-hike during 2019 than previously offered two area something that can weigh on the US Dollar (USD).
Also, the fourth quarter (Q4) 2018 gross domestic product (GDP) release for New Zealand at 21:45 GMT will be important. The GDP bears consensus of +0.6% growth against +0.3% prior on a quarterly basis while likely registering +2.5% expansion versus 2.6% earlier on YoY.
NZD/USD Technical Analysis
Two-week-old upward sloping support line acts as immediate support for the NZD/USD pair around 0.6850, a break of which can drag it towards 0.6830 and 0.6810 rest-points.
On the upside, 0.6870-75 continues to restrict the pair’s short-term advances targeting 0.6900 and 0.6940 numbers to the north.