NZD/USD extends pullback to 0.6550 amid risk reset
- NZD/USD manages to recover from multi-week low amid abating fears of China’s coronavirus.
- Comments from RBNZ’s Hawksby, NZ PM and Finance Minister add to the pullback.
- Data from Australia, FOMC will be in focus for now whereas Chinese headlines could keep the driver’s seat.
NZD/USD holds on to recovery gains to 0.6550 by the press time of early Asian session on Wednesday. The kiwi pair recently benefited from the recovery in the market’s risk-tone as well as mixed comments from RBNZ’s Assistant Governor. Even so, traders will be on the lookout offshore data/events for further direction.
New Zealand policymakers play their role…
Be it the Reserve Bank of New Zealand’s (RBNZ) Assistant Governor Christian Hawkesby or PM Jacinda Ardern, not to forget Finance Minister Grant Robertson, the key policymakers recently crossed wires and pleased the kiwi buyers. The RBNZ member failed to provide any clear guidance of the central bank’s future actions.
While open support for weak New Zealand dollar (NZD) should have weighed on the kiwi pair, accusing trading partner weakness, which is likely to recover, for the RBNZ’s dovish actions indicate the readiness for the central bank’s U-turn in future and favored the quote.
Even so, upbeat comments from the PM Ardern and Finance Minister Robertson seemed to have cut the odds of any action by the RBNZ in near future.
Risk recovery on its way…
In addition to Chinese President Xi Jinping’s readiness and capability of conquering the virus thing, upbeat comments from the famous respiratory expert also added to the market’s concern that the worst about coronavirus will be over soon. It’s worth mentioning that the Chinese central bank and securities regulator also crossed wires and said to placated investors.
It should be noted that the recovery in risk could be well witnessed in the US 10-year treasury yield’s pullback from multi-week low to 1.65% and a mildly positive closing of Wall Street.
It should also be noted that US President Donald Trump again used his twitter handle to push the Federal Reserve towards a rate cut. The same could have had a positive impact on the pair’s recovery.
Moving on, headline inflation numbers from the key trading partner Australia will be in focus amid the lack of domestic data. Also, news concerning China could keep playing its role to determine market moves.
The bulls need to conquer a 50-day SMA level near 0.6585 to restore short-term strength until then fears of revisiting June 2019 low near 0.6485 can’t be ruled out.