NZD/USD reverses the previous day’s gains, falling to its lowest level in a week.
Market sentiment is dwindling as a result of covid troubles and mixed central banker reports.
The major catalysts for the light calendar are sentiment-related headlines.
NZD/USD is trading at 0.6995, down 0.30 percent intraday and nearing the weekly low in the Asian session on Thursday. Unfortunately, due to the US dollar’s continued strength and the coronavirus (COVID-19) difficulties, the Kiwi pair leads the G10 losers. A lack of optimistic stories expressing hopes of RBNZ rate hikes, which favored the quotation the day before, could also support the bears.
Because the FOMC minutes failed to provide any clear advice on future monetary policy moves, the US dollar continues on the offensive. However, the US dollar index (DXY) seesaws near its highest level since early April, as flashing 92.73 as a quote on Wednesday.
Aside from the Fed’s hesitation and the lack of any direct signs that a rate hike is on the way, the mounting covid troubles further impact on market sentiment and put a safe-haven bid beneath the US currency.
South Korea recently set a new daily infection record, while Japan is considering extending the emergency in Tokyo. Furthermore, Indonesia’s death toll reached an all-time high the day before, while Australia is also grappling with the situation and has already declared additional local lockdowns.
It’s worth noting that on the previous day, a number of top-tier institutions backed the Reserve Bank of New Zealand’s (RBNZ) rate rise plans for late 2021, citing an encouraging quarterly business survey forecast and the government’s ability to contain the epidemic at home.
S&P 500 Futures are down 0.10 percent intraday from their record high set on Wednesday, while US 10-year Treasury rates are down 1.5 basis points to their lowest level since late February.
NZD/USD traders should keep a watch on the qualitative drivers for fresh impulse, given the dearth of important data/events and risk-off mood-backed US dollar rise.
NZD/USD sellers are directed towards a three-week-old support line near 0.6955 if the 200-DMA is not crossed around 0.7070, followed by a bearish break of the 0.7000 level./n
