NZD/USD: Bears keep the baton around four-month low amid downbeat fundamentals
- NZD/USD struggles to justify the latest pullback from the lowest in four months.
- Downbeat New Zealand Retail Sales, coronavirus keep sellers hopeful.
- A light economic calendar will keep the market’s focus on coronavirus headlines.
NZD/USD seesaws around 0.6320, down 0.43%, during the Asian trading session on Monday. That said, the pair gapped down from 0.6348 to 0.6319 at the start of this week’s trading. With the increase in coronavirus cases outside China, traders rush to risk-safety while selling commodities and commodity-linked currencies including the New Zealand dollar.
While a surge in coronavirus cases from Asia grabbed the market’s attention during the later part of the last week, a multi-fold increase in Italy’s confirmed cases triggered the risk-off at the week’s start. During the weekend, the Washington Post came out with the news that coronavirus cases from Italy spiked from three to 132 in a matter of days. This fuelled concerns that the epidemic is spreading outside Asia and is now affecting the key global economy.
Following that, news of a new presumptive case from Ontario and efforts by China’s trade council kept the trade sentiment under pressure. China’s trade council issued 3,325 force majeure certificates to protect firms from legal damages as they had to forgo multiple days of activity due to the deadly coronavirus.
It should be noted that despite coronavirus hurting China’s manufacturing activity, policymakers from the US and China showed optimism that Beijing will meet the targets agreed in the phase-one deal. However, this is less likely to happen considering the recent actions in and out of China.
With this, the market’s risk-tone remains heavy with the S&P 500 Futures down 1.30% to 3,295.
Also weighing on the NZD/USD prices is the fourth quarter (Q4) Retail Sales from New Zealand. The headline figures slipped below upwardly revised 1.7% to 0.7% QoQ whereas Retail Sales ex-autos declined from 1.9% to 0.5%.
Moving on, a lack of major data/events on the economic calendar will keep traders on the lookout of any fresh coronavirus news to determine near-term trade direction.
Sustained trading below November 2019 low of 0.6315, also breaking 0.6300 round-figure, will recall October 2019 bottom surrounding 0.6240. On the upside, buyers are likely to avoid entry unless breaking February 11 low of 0.6377.