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Forex Market: NZD/USD trades near one-month highs as Asian macro data outweighs COVID-19 concerns

NZD/USD rose on Tuesday and was on track to retest last Friday’s one-month high of 0.6705, as upbeat Asian macro data offset concerns over a second wave of the COVID-19 disease across the United States and Europe.

Profits in China’s industrial sector surged for a fifth consecutive month in September, while South Korea returned to growth.

“Trade numbers in Asia have been improving. Most countries are now reporting positive year-on-year export growth. For now, that is helping to offset nervousness about the COVID outbreaks in Europe,” Khoon Goh, head of Asia research at ANZ, said. “It’s the export-oriented currencies that are outperforming in Asia.”

Additionally, the region’s response to the coronavirus pandemic also favored sentiment, as countries such as China, Japan, South Korea and Singapore combined have been reporting less than 1,000 new daily infections through October. In comparison, new cases in the United States and France have hit record numbers, with tens of thousands of daily infections being reported, which adds to prospects of more restrictive measures.

Still, currency market moves remained limited due to investor caution ahead of the November 3rd presidential election in the US.

“People are wary of putting on fresh positions given the event risk. Price action over the next one week may remain choppy,” Mayank Mishra, Forex strategist at Standard Chartered Bank, was quoted as saying by Reuters.

“The view we’ve taken is that the medium-term dollar bearish dynamics remain in place, irrespective of who comes to the White House. The short-term part may be affected by the outcome, and we believe that a Biden win is likely to accelerate the dollar downside.”

As of 8:36 GMT on Tuesday NZD/USD was edging up 0.17% to trade at 0.6687, after earlier touching an intraday high at 0.6697, or a level close to last Friday’s one-month high. The pair has risen 1.12% so far in October, following a 1.80% slump in September, its first monthly loss since March.

On today’s economic calendar, the US Census Bureau is to report on durable goods orders for September at 12:30 GMT.

Market players will be also expecting the monthly report on US consumer confidence for October due out at 14:00 GMT.

Bond Yield Spread

The spread between 1-year New Zealand and 1-year US bond yields, which reflects the flow of funds in a short term, equaled 5.5 basis points (0.055%) as of 7:15 GMT on Tuesday, down from 6.0 basis points on October 26th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – 0.6681
R1 – 0.6692
R2 – 0.6708
R3 – 0.6719
R4 – 0.6730

S1 – 0.6665
S2 – 0.6654
S3 – 0.6637
S4 – 0.6621

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