NZD/USD down to test 5-month lows near 0.6885
- NZ politics continue to weigh
- Cross-driven weakness in play
- Eyes on NZ trade balance
The offered tone around the New Zealand dollar keeps growing bigger in the mid-Asian trades, now pushing NZD/USD back near five-month lows of 0.6886 amid persistent USD demand and cross-driven flows in play.
NZD/USD fall further in tandem with Aussie
The Kiwi extends its week-long downward trajectory on Wednesday, with the bears in complete control amid NZ political developments, with the PM-designate Ardern appointing New Zealand First party leader Winston Peters as the deputy prime minister and foreign minister. Markets remain wary over Peters' appointment into two of the country’s most powerful positions, as he widely considered a protectionist politician.
Moreover, ongoing rally seen in the US dollar and Treasury yields, on the back of GOP support for Taylor as the next Fed Chair and Trump reflation trades, also collaborate to the renewed weakness seen in the spot. However, NZD/USD appears to find little support from heavy selling seen in AUD/NZD cross, following softer Aus CPI data, which knocked-off the Aussie across the board.
Meanwhile, mixed market sentiment amid weaker oil prices and ahead of the US durable goods data release also weighs down on the sentiment around the higher-yielding NZD. Also, of relevance remains the NZ trade balance data due on the cards tomorrow.
NZD/USD Levels to consider
The NZD breached 0.6900 support, below which 0.6850 (psychological levels) and 0.6837/16 (May lows) are key near-term downside areas. To the topside, a test of 0.6932/34 (daily pivot/ 5-DMA) due on the cards, which could open doors towards 0.6978 (classic R1).