NZD/USD Technical Bias Bearish, Dow Jones Brushes off Coronavirus
New Zealand Dollar, NZD/USD, Coronavirus, S&P 500 – Asia Pacific Market Open
- Sentiment-linked New Zealand Dollar falls, NZD/USD technical bias bearish
- S&P 500 & Dow Jones brushed off coronavirus woes, PBOC injects liquidity
- New cases risk souring market mood with Japanese Yen eyeing Asian equities
New Zealand Dollar Falls Ahead of RBNZ Despite Rosy Session on Wall Street
The sentiment-linked New Zealand Dollar underperformed, sending NZD/USD lower despite Wall Street ending on an upbeat Monday. Ahead of tomorrow’s Reserve Bank of New Zealand interest rate announcement, the markets may be betting on more-dovish commentary due to the coronavirus. Earlier in the day, Prime Minister Jacinda Ardern said that the Wuhan virus will impact growth.
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The S&P 500 and Dow Jones closed 0.73% and 0.60% to the upside respectfully, brushing off concerns that the coronavirus may impact local growth. Market mood did improve during the Asia Pacific trading session, where the People’s Bank of China (PBOC) injected about CNY900b in reverse repos. The additional liquidity and hints to a cut in the deposit rate appeared to help cool investors’ woes for now.
Tuesday’s Asia Pacific Trading Session – Japanese Yen, Australian Dollar
The anti-risk Japanese Yen may face selling pressure should Asia Pacific equities follow the rosy North American trading session. However, S&P 500 futures are little changed after reports crossed the wires that coronavirus fatalities topped 1k and an additional 2.4k cases were reported in China on Monday. The Australian Dollar has local business confidence and conditions to stir additional volatility.
New Zealand Dollar Technical Analysis
The NZD/USD extended its downtrend from late December after prices recently took out support at 0.6454. Maintaining declines are two psychological barriers. The first is inner resistance followed by outer resistance on the chart below. Taking out the former may pave the way for a climb towards the latter but further gains will be needed to overturn the medium-term technical bearish bias.
NZD/USD Daily Chart
--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.