NZD/USD rebounds modestly toward 0.7030 before testing 0.7000
- NZD/USD erased a portion of its daily losses in early American session.
- US Dollar Index struggles to preserve bullish momentum.
- Wall Street's main indexes are suffering heavy losses.
The NZD/USD pair started the new week under bearish pressure and fell to its lowest level in three weeks at 0.7006 before staging a modest recovery. As of writing, the pair was down 0.15% on the day at 0.7030.
DXY edges lower on falling T-bond yields
The risk-averse market mood on Monday, due to the Evergrande financial crisis in China, made it difficult for the NZD to find demand. Moreover, the data from New Zealand showed that the Business NZ PSI declined sharply to 35.6 in August from 57.9 in July and caused NZD/USD to remain on the back foot.
Although the greenback gathered strength in the first half of the day, falling US Treasury bond yields seem to be capping the currency's upside. The US Dollar Index (DXY), which rose to its highest level in a month at 93.45 earlier in the day, is currently flat at 93.27 and the benchmark 10-year US T-bond yield is losing 3% at 1.324%.
In the meantime, the S&P 500 Index is falling 1.6% after the opening bell, suggesting that safe-haven flows are unlikely to allow NZD/USD to gather bullish momentum in the remainder of the day.
On Tuesday, the Westpac Consumer Survey from New Zealand for the third quarter will be looked upon for fresh impetus. Meanwhile, investors will keep a close eye on the performance of major Asian equity indexes.
Technical levels to watch for