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Kiwi trades sideways despite escalation in the US-China trade war

NZD - New Zealand Dollar

The New Zealand Dollar begins a new week on the back foot and finds itself one cent weaker from this time last Monday when valued again its US counterpart. Initially moving off highs of 0.6641 on Monday and touching lows of 0.6509 witnessed on Friday during the European session, the NZD/USD is feeling the pressure as traders are expecting the RBNZ to cut rates on Wednesday. Since their last cut on June 25, the local economy has seen a steady improvement, but perhaps not enough to dissuade policy makers that more stimulus may be required. Adding fuel to the fire the commodity linked currency is closely aligned with the performance of the global economy, and with China being one NZ’s largest customers the NZD is largely affected.

Looking ahead, it’s a busy week locally, we kick off with the release of ANZ Commodity Prices today with forecasts expecting an improvement from -3.9% to 0.0%. Tuesday sees quarterly employment data followed by the monetary policy meeting on Wednesday. On the technical front, the NZD/USD is currently trading at 0.6530, immediate support can be found at 0.6500, followed by 0.6480. Meanwhile 0.6560 and 0.6580 seem nearby resistances to conquer for buyers.

Key Movers

Last week equity markets around the world hit global highs in optimism that US-China trade talks were moving in a positive direction, this quickly changed direction after Trump tweeted that a 10% tariff would be imposed on $300 billion worth of Chinese goods on September 1st after US negotiators returned from Shanghai making zero progress. US nonfarm payrolls increased 164k in July on the heels of a downward-revised 193k increase in June and the unemployment rate came in at 3.7%.

The US Dollar is lower against both the Euro buying 1.1106 and the Japanese yen at 106.57. The GBP/USD closed the week around 1.2160, local data released saw UK Construction PMI at 45.3 for the month of July which was better than the previous month of 43.1 but still missing expectations of 46.0. GBP/USD has been limited on any upward moves as increased odds of a no-deal Brexit after Boris Johnson became Prime Minister.

Expected Ranges

NZD/USD: 0.6480 - 0.6580 ▼

NZD/AUD: 0.9580 - 0.9700 ▲

GBP/NZD: 1.8400 - 1.8750 ▲

NZD/EUR: 0.5820 - 0.5940 ▼

NZD/CAD: 0.8530 - 0.8680 ▼