NZD/USD keeps the red, all eyes on New Zealand/China data

• Global economic woes and the US Dollar (USD) strength continues to hurt the Kiwi.
• Domestic and China data will be the key with 0.6700 and 0.6735 being important levels to observe.

NZD/USD drops to 0.6730 at the start of Asian sessions on Friday. The Kiwi pair recently witnessed downside pressure as doubts over global economic growth joined upbeat data from the US. Business NZ PMI and electronic card retail sales from New Zealand, followed by China’s trade balance, will be closely watched for fresh impulse ahead of the US Michigan consumer sentiment index figures.

While mixed prints of China’s inflation numbers and a cut in global growth forecast by the International Monetary Fund (IMF) initially disappointed commodity front, doubts over the macroeconomy as conveyed by the International Energy Agency (IEA) and the Bank of Japan (BOJ) Governor Haruhiko Kuroda spread the pessimism.

It should also be noted that the better than expected 1.9% figure of the US producer price index (PPI) (YoY) to 2.2% coupled with a 50-year low of the initial jobless claims to 196K became the extra catalyst that pleased Kiwi sellers.

Investors gave little importance to the comments made by the Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr during an interview with Bloomberg. Mr. Orr stepped back from his March month statements that the next move in rates was more likely to be down by saying that it’s not yet clear whether an interest-rate cut is warranted in May.

Looking forward, March month details of New Zealand’s Business NZ PMI is likely to come in at 54.4 from 53.7 whereas electronic card retail sales could witness soft growth of 0.7% on MoM basis versus 0.9% prior. Further, China’s trade balance may grow to $7.05 billion from $4.08 billion (revised) during March. Imports are expected to register -1.3% figure against -5.2% whereas exports could rally +7.3% from -20.8% (revised). Also, the US Michigan consumer sentiment index could weaken to 98.0 from 98.4.

NZD/USD Technical Analysis

Given the NZD/USD’s another drop beneath 200-day simple moving average (SMA), 0.6700 and 0.6690 can’t be denied. Though, 0.6650 may offer strong support to prices, a break of which can recall sub-0.6600 area on the chart.

Alternatively, 200-day SMA level of 0.6735 acts as an immediate upside barrier ahead of 0.6775 and 0.6800 whereas 100-day SMA and 50-day SMA can challenge buyers near 0.6810 and 0.6815 then after.