NZD/USD: Little positive around 0.6820 on China data, US-Sino trade talks

• Reports of constructive US-China talks by the US Treasury Secretary and China’s upbeat PMIs helped the NZD/USD begin the week on a positive note.
• China’s Caixin manufacturing PMI and the US data will be in the spotlight.

NZD/USD begins the week’s trading little positive near 0.6820 on Monday. The Kiwi pair holds recent recovery based on the positive developments surrounding the US-China trade talks as weekend manufacturing and non-manufacturing data from China has been positive. Traders will concentrate on China’s Caixin manufacturing purchasing managers’ index (PMI) and the US data in order to determine the near-term trade direction.

The US delegation headed by the Treasury Secretary Steven Mnuchin and the Trade Representative Robert Lighthizer was in the Chinese capital for two days ended on Friday. While intermediate developments surrounding the trade talks were positive, Friday’s tweet from Mnuchin boosted investors’ morale as he signaled constructive talks were held and was looking forward to welcoming Chinese Vice Premier Liu He for further discussion in Washington during next week.

Adding to the trading sentiment could be positive outcomes of China’s NBS manufacturing and non-manufacturing PMI for March month. The NBS manufacturing PMI crossed 50.00 level that parts contraction in activity to the increase for the first time in four months whereas non-manufacturing PMI also rose to the six month high. Needless to say that the manufacturing PMI surpassed 49.5 market consensus and 49.2 prior by being at 50.5 while non-manufacturing PMI grew to 54.8 from 54.3 versus 54.1 expectations.

It should also be noted that the Chinese delegation headed by Vice Premier is scheduled to arrive the Washington DC on Wednesday for further trade talks. Given that China is world’s largest commodity user and second-biggest consumer to New Zealand, positive news for a trade deal between the US and China, together with positive data from the later one, helps the New Zealand Dollar (NZD) remain positive.

Traders may now shift their attention to the economic calendar as China’s Caixin manufacturing PMI for March is up for release at 01:45 GMT. Following that, the US retail sales at 12:30 GMT and the US ISM manufacturing PMI at 14:00 GMT will grab market attention.

China’s Caixin manufacturing PMI is less likely to be changed from previous 49.9 whereas the US ISM manufacturing PMI could strengthen to 54.5 from 54.2 during March. Moreover, the US retail sales control group may increase softer than 1.1% prior to 0.4% during February month.

NZD/USD Technical Analysis

100-day simple moving average (SMA) level of 0.6810 acts as immediate support for the NZD/USD pair, a break of which can drag it back to 0.6800 ahead of highlighting 0.6760 support line stretched since late-January.

On the upside, 50-day SMA level of 0.6835 and 0.6870 can limit the immediate upside of the pair whereas 0.6900 and a medium-term descending resistance-line at 0.6915 may challenge buyers afterward.