NZD/USD trades with a mild negative bias around 0.6200 mark, lacks follow-through – by hareshmenghani NZDUSD China Fed RiskAppetite Currencies
ous day's strong gains. Spot prices drop to a fresh daily low in reaction to the weaker Chinese macro data, albeit manage to rebound a few pips in the last hour and currently trade with a mild negative bias around the 0.6200 mark.
A private survey showed that business activity in China's manufacturing sector unexpectedly shrank in July, which turns out to be a key factor exerting some pressure on antipodean currencies, including the Kiwi. In fact, China's Caixin Manufacturingfell in contraction territory and came in at 49.2 for July, down from the previous month's reading of 50.5. This, along with a modest US Dollar strength, is seen weighing on the NZD/USD pair.
In fact, the USD Index , which tracks the Greenback against a basket of currencies, climbs back to its highest level since July 10 touched last Friday and remains well supported by the prospects for further policy tightening by the Federal Reserve . The upbeat US GDP report released last week pointed to an extremely resilient economy and kept the door for one more 25 bps rate-hike by the Fed in September or November wide open.
This, in turn, helps limit the downside for the NZD/USD pair, at least for the time being, and warrants some caution before placing aggressive bearish bets. Market participants now look to the US economic docket, featuring the release of the ISM Manufacturing PMI and JOLTS Job Openings data later during the early North American session. This, along with the broader risk sentiment, might provide a fresh impetus to the USD and the major.
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