NZD/USD: Bears looking for firm direction to extend losses below 0.6450

• NZD/USD seesaws around three-day low, keeps the previous day’s pullback from 0.6467.
• US-China remains at loggerheads over political issues but chose to keep talking the trade in Hawaii.
• Fed Balance shrank for the first time since February.
• Virus woes keep weighing the risk-tone sentiment amid a lack of major data/events.

NZD/USD trades around 0.6430 during the initial Asian session on Friday. The kiwi pair fails to refresh the three-day low despite extending the latest weakness from 0.6467. Even so, the coronavirus (COVID-19) concerns, backed by the previous day’s downbeat New Zealand GDP, keep the sellers hopeful.

While the latest numbers from China prove right their claim that situations are under control in Beijing, jump in the virus figure from Florida and Texas weigh on the market’s risk-tone. Additionally favoring the pessimists could be the fresh increase in pandemic data from German and Portugal. As a result, the fears of the wave 2.0 gains momentum and weigh on the commodity-linked currencies like the New Zealand dollar (NZD).

On the other hand, diplomats from the US and China continued to jostle over Hong Kong and Xinjiang when they met in Hawaii on Thursday. However, their readiness to keep the trade deal talks on track keeps the risk-tone sentiment mildly damaged. In addition to the US-China tension, the on-going tussle between the Korean neighbors and India-China border rout add weakness to the traders’ precision.

Looking at the data front, weakness in the New Zealand’s first quarter (Q1) GDP rekindled fears of a technical recession when the growth figures comprise the actual economic stop during the coronavirus (COVID-19)-led lockdowns. Analysts at the Australia and New Zealand Bank back the argument while saying, “Yesterday’s softer than expected NZ Q1 GDP numbers are likely to weigh on sentiment for a while here, with a poor result cementing in a technical recession. Many expected it but the worse result will dampen rebound enthusiasm, with global virus re-emergence themes.” Elsewhere, the US Jobless Claims rose beyond forecast of 1300K to 1508K and dimmed the charm of upbeat Philadelphia Fed Manufacturing Survey.

Market’s risk barometers continue to portray downbeat sentiment with Wall Street benchmark posting mild losses and the US 10-year Treasury yields down to 0.71% by the end of Thursday. More recently, S&P 500 Futures gained 0.25% to 3,107 as we write.

Considering the lack of major data/events to publish during the Asian session, the pair traders may keep eyes on the qualitative catalyst, concerning China, virus and trade war, for fresh impetus. It should, however, be noted that the risk-tone is less likely to be recovered anytime soon and may keep exerting downside pressure on the quote.

Technical analysis

The pair’s sustained trading below the weekly falling trend line, at 0.6455 now, directs sellers towards a 200-day SMA level of 0.6322. Though, Monday’s bottom around 0.6380 could offer immediate support.