NZD/USD: Muted reaction to China data, Friday’s close pivotal
- With risk under pressure, NZD/USD is struggling to cheer the slight improvement in the China data.
- China's Services PMI remained below 50 in March, but printed well above February's reading of 26.
- Thursday's Doji candle suggests indecision and makes Friday's close pivotal.
NZD/USD is barely moving in response to the China service sector data released at 01:45 GMT.
Caixin’s Services PMI for March came in at 43 versus February’s reading of 26. While a below-50 reading indicates contraction, the pace of decline in the activity eased in March.
Meanwhile, Reserve Bank of New Zealand’s governor Orr was out on the wires early Friday, stating that the bank can increase stimulus and maintain it for a longer period of time, if needed.
The market, however, is in no mood to cheer the slight improvement in China’s data or assurances from RBNZ’s Orr, possibly because the number of coronavirus cases across the globe continue to rise and have crossed the 1 million mark.
The situation in the US, the world’s largest economy is deteriorating, as suggested by the record weekly jobless claims figure released Thursday. Adding to concerns are reports that China risks a second wave of the coronavirus outbreak, which originated in the country’s wuhan province.
With risk under pressure, as shown by the decline in the S&P 500 futures, the NZD/USD pair could feel the pull of gravity. The pair is currently sidelined near 0.5910, having created a Doji candle on Thursday, a sign of indecision in the marketplace.
A close above the Doji candle’s high of 0.5973 would mean the period of indecision has ended with a bullish breakout and could yield a notable upside move. On the other hand, a close under the Doji candle’s low could bring in additional declines.
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
