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NZD/USD: Rebound remains capped below 0.71 on mixed NZ fundamentals

NZD/USD: Rebound remains capped below 0.71 on mixed NZ fundamentals

The NZD/USD pair is seen replicating yesterday’s Asian moves, as its recovery mode from four-month lows stalls once again near 0.7085 levels, despite broad USD weakness.

NZD/USD: 5-DMA – a tough nut to crack

The Kiwi extended its overnight retreat and hit a new four-month lows at 0.7056 in early trades, after NZ electronic card retail sales data came in below markets’ expectations, which added to the recent signs of wobbles seen around the NZ economy.

Further, markets ignored upbeat ANZ monthly inflation gauge, as the comments from New Zealand First Party leader Winston Peters weighed down on the local currency. Moreover, Fitch ratings said in its latest report that macro-economic risks in New Zealand remain elevated, kept the NZD/USD recovery in check.

Meanwhile, yesterday’s awful Chinese service PMI numbers continue to dampen the sentiment around the Kiwi. China’s Caixin Services PMI unexpectedly slumps to 21-month lows in Sept

However, the recovery mode remains intact amid resurgent USD supply across the board, as tensions between the US and North Korea escalate. Trump may travel to Inter-Korean border next month – Yonhap

Later today, the pair will take cues from the upcoming US building permits and IBD/TIPP Economic Optimism data, while the speech by the FOMC member Kashkari will also draw some attention.

NZD/USD Levels to consider                                                                              

NZD/USD tested 5-DMA (0.7085) once again, with 0.7056 (4-month low) still guarding 0.7000 (round number) and a break back below 0.6950 (psychological levels) are key near-term downside areas. To the topside, a test of 0.7100 (key resistance) due on the cards, which could open doors towards 0.7137 (10-DMA).

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