NZD/USD remains steady around 0.7000 ahead of China PMI data

• NZD/USD stays range-bound near two-week top, retreats of late.
• Market sentiment dwindles amid mixed clues and a light calendar.
• Traders await US NFP to confirm Fed Chair Powell’s Jackson Hole speech.
• NZ Building Permits, ANZ sentiment data also decorate the calendar, month-end positioning, risk catalysts are important too.

NZD/USD edges higher around 0.7000, recently easing to 0.6995, during early Tuesday morning in Asia.

The Kiwi pair portrayed a sluggish start to the week near a fortnight top amid a lack of major data/events and market players’ search for more clues to validate Fed Chair Jerome Powell’s cautious optimism, uttered at the Jackson Hole Symposium. It’s worth noting that the mixed factors concerning the risk appetite and month-end positioning also contributed to keeping NZD/USD prices sidelined.

Downbeat prints of the US Dallas Fed Manufacturing Business Index for August and Pending Home Sales for July back the need for easy money policy, backing Powell’s resistance in announcing details of tapering, not to forget suggesting a gap between taper and rate hike. However, the US Dollar Index (DXY) rebounds from the lowest level since August 16 as covid and geopolitical issues weigh on the market sentiment.

The US withdrawal of troops from Afghanistan and hurricane Ida join the Sino–American tussles to portray geopolitical challenges to market players’ moods. On the other hand, a bit easy covid infections in New Zealand (NZ) and PM Jacinda Ardern’s cautious optimism, despite extending the Alert Level 4 status in Auckland for two more weeks, contrast Australia’s record daily infections to highlight the virus fears.

Amid these plays, Wall Street benchmarks closed mixed while the US 10-year Treasury yields drop 3.2 basis points (bps) to 1.28% by the end of Monday’s North American session.

In addition to the sober sentiment, downbeat gold prices and uncertainty surrounding the Reserve Bank of New Zealand’s (RBNZ) next moves also restrict NZD/USD moves of late.

Hence, the pair traders seek more clues for clear direction and will emphasize Friday’s US jobs report for August. Before that, China’s official activity data for August will be the key due to NZ-China trade relations and the recent fears of Beijing’s economic weakness. Headlines NBS Manufacturing PMI is expected to ease from 50.4 to 50.2 whereas the Non-Manufacturing PMI could decline from 53.3 to 52.8. While downbeat forecasts signal further hardships for NZD/USD, the market’s risk appetite and the US dollar moves will be important to watch.

Technical analysis

Despite struggles to overcome a downward sloping resistance line from May 26, around 0.7010, NZD/USD prices stay above 50-DMA level of 0.6985, which in turn joins bullish MACD signals to favor buyers.