- NZD/USD seesaws near two weeks high amid a lack of fresh clues.
- Upbeat GDT, recovery in Antipodeans previously ignored doubts over the US-China trade deal.
- Reports that BNZ bumped up Fonterra milk price forecast for 2019/20 keeps the bulls hopeful.
While the upbeat sentiment of the dairy producers and an overall short covering move in commodity-linked currencies recently propelled the NZD/USD pair towards a two week high, the Kiwi pair struggles for direction around 0.6430 at the start of Wednesday’s Asian session.
New Zealand’s GDT Price Index recently crossed a 1.6% forecast with 1.7% mark. “Whole milk powder prices lifted 2.2% to USD3321/t – a touch weaker than the market expected. The market did not appear to be influenced by the NZ milk production data released yesterday, which showed a 1.5% fall in October production – a trend which is likely to continue in the coming months,” says the Australia and New Zealand Banking Group (ANZ).
Recent reports from BNZ say, “The NZ milk price outlook continues to improve. Dairy prices have been firm in 2019 and have pushed higher over recent auctions. GDT prices are heading toward the top of a trading range that has held them since 2014 and is now a chunky 26.4% higher than a year earlier.”
Trade jitters between the United States (US) and China continue with the latest signs showing the failed trade talks in May to be used as a benchmark to rollback tariffs. However, Reuters cited US President Donald Trump saying “China is going to have to make a deal," else he will "just raise tariffs". Hence, the trading sentiment stays gloomy. Increasing the tension between the world’s top two economies in protests in Hong Kong where the youth is still fighting against the government despite witnessing a heavy defeat in the last hours.
Traders now look for fresh headlines in the US-China phase one deal amid a lack of major data/events up for publishing on the economic calendar. However, minutes of the Federal Open Market Committee’s (FOMC) latest monetary policy meeting could entertain market watchers during the later part of the day.
The quote needs to remain strong beyond the 100-day Exponential Moving Average (EMA) level of 0.6427 in order to aim for the monthly high of 0.6466, 0.6500 and then 200-day EMA level of 0.6522. On the downside, 50-day EMA level near 0.6380 and 0.6320 can please sellers during the pullback.