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- NZD/USD depreciates following China’s August trade data, which showed weaker-than-expected import growth of 28.2%.
- Disappointing Chinese import expansion weighs heavily on the Kiwi Dollar due to strong bilateral trade ties.
- Downside losses remain capped by broader US Dollar weakness ahead of upcoming US inflation readings.
NZD/USD extends its losses for the third successive day, trading around 0.5850 during the Asian hours on Tuesday. The pair is depreciating as the New Zealand Dollar (NZD) remains under pressure following the release of trade data from China, New Zealand’s major trading partner.
China’s August Trade Balance reached $119.09 billion, aligning closely with forecasts and improving on July’s $112.5 billion figure. Exports grew by 25% year-over-year, accelerating from July’s 23.9% increase. However, imports rose by 28.2% year-over-year—a slight pickup from the previous month’s 27.5% growth, but falling short of the 30% expansion expected by markets.
Despite this softness in the Kiwi Dollar, further downside for the NZD/USD pair may be cushioned by ongoing weakness in the US Dollar. The Greenback could regain its footing soon, however, as traders price in a greater than 60% probability of a Federal Reserve rate hike in September, bolstered by a stronger-than-expected August US labor report.
US Nonfarm Payrolls expanded by 162,000 while the Unemployment Rate held steady. Investors are now awaiting the upcoming US Producer Price Index and Consumer Price Index reports later this week to gauge the Fed’s next policy move.
Technical Analysis:
In the daily chart, NZD/USD trades at 0.5850, keeping a bearish near-term tone as it holds below both the 50- and nine-day Exponential Moving Averages (EMAs). The 14-day Relative Strength Index (RSI) has retreated toward the low-40s, hinting at fading bullish momentum rather than outright oversold conditions, which suggests rallies are likely to face selling pressure while price remains capped beneath these moving averages.
On the topside, immediate resistance is seen at the 50-day EMA around 0.5867, with a subsequent hurdle at the shorter-term 9-day EMA near 0.5887, where a daily close above would be needed to ease the current downside bias. On the downside, the lack of nearby structural price levels leaves the pair vulnerable to further slippage, with the soft RSI profile and the cooling FXS Fed Sentiment Index backdrop reinforcing the risk of renewed declines if buyers fail to reclaim the overhead EMA cluster.
