- NZD/USD has pulled back from multi-month highs hit on Thursday, though the fall seems limited.
- China’s COVID-19 woes weigh on investor sentiment and the NZD, which is not helped by rate cuts.
The pair NZD/USD comes under some selling pressure on Friday and reverses the previous day’s positive move to the 0.6300 zone, the highest level since August 18. The intraday decline extended in the European session reaching as high as 0.6227, from where it bounced towards 0.6250.
Worries about the worsening COVID-19 situation in China are keeping the recent bullish movement in the markets at bay and turning out to be a key factor working against the kiwi. In fact, China has announced strict restrictions in several major cities in the wake of a record rise in daily COVID-19 cases. These developments add to concerns about a further slowdown in economic activity and dampen investor appetite for riskier assets.
China announced a cut in the reserve requirement rate that had no significant impact on the market, nor on the kiwi, which is also falling against the aussie.
The NZD/USD pair’s downside is likely to be limited amid bearish sentiment surrounding the US dollar following the minutes of the November Federal Open Market Committee (FOMC) meeting released on Wednesday. These revealed that more rate hikes are expected in the face of high inflation, but the pace could ease. This reaffirmed the bets for a rise of 50 basis points in December.
On top of this, an unprecedented rate hike of 75 basis points by the Reserve Bank of New Zealand (RBNZ) on Wednesday supports the prospects for some dip buying to emerge around the NZD/USD pair. Therefore, it will be prudent to wait for strong follow-up to selling before positioning for a deeper pullback amid the absence of relevant economic data and meager trade volumes. Wall Street will have a short day on Friday.
|Last price today||0.6237|
|today’s daily change||-0.0031|
|Today’s daily change in %||-0.49|
|today’s daily opening||0.6268|
|previous daily high||0.629|
|previous daily low||0.622|
|Previous Weekly High||0.6206|
|previous weekly low||0.6062|
|Previous Monthly High||0.5874|
|Previous monthly minimum||0.5512|
|Daily Fibonacci of 38.2%||0.6263|
|Daily Fibonacci of 61.8%||0.6247|
|Daily Pivot Point S1||0.6229|
|Daily Pivot Point S2||0.6189|
|Daily Pivot Point S3||0.6159|
|Daily Pivot Point R1||0.6299|
|Daily Pivot Point R2||0.6329|
|Daily Pivot Point R3||0.6369|
Source: Fx Street