NZD/USD: Will it close the bearish opening gap?
The NZD/USD pair is seen making minor-recovery attempts above 0.7050 levels, although lacks follow-through amid downbeat Chinese services PMI release and renewed North Korea risks.
NZD/USD: Focus shifts to China trade report
The Kiwi stalled its post-NFP recovery and witnessed a bearish opening gap in Asia, retesting fresh four-month troughs reached at 0.7059 on renewed political jitters surrounding the New Zealand’s political scenario. The NZD sank after a final vote count in the country’s tight general election released over the weekend failed to identify a clear winner.
Imre Speizer, head of NZ strategy at Westpac, noted: “It remains unclear which way NZ First will swing, and when it will announce its intentions. As a consequence, the election-related uncertainty hanging over NZD markets is likely to persist until the composition of the government is announced.”
Over the last hours, the spot failed to sustain the recovery from 4-month lows, as awful Chinese service PMI numbers hit the sentiment around the Kiwi. China is New Zealand’s top trading partner. China’s Caixin Services PMI unexpectedly slumps to 21-month lows in Sept
Moreover, renewed geopolitical tensions between North Korea and the US, following Friday’s reports of North Korea planning to test a ballistic missile that is capable of reaching the west coast of the US, also continued to weigh on the higher-yielding currency NZD, keeping the recovery attempts in check.
Focus now shifts towards the key US macro release, FOMC meeting minutes and Chinese trade figures due later in the week ahead for fresh direction on the major.
NZD/USD Levels to consider
NZD/USD tested daily pivot at 0.7067, with 0.7059 (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 0.7104 (5-DMA) due on the cards, which could open doors towards 0.7153 (10-DMA).