Forex Market: NZD/USD trades mostly flat near 0.6600, markets await RBNZ policy decision, US-China trade talk resumption

Following an over 1% retreat on Friday, NZD/USD was mostly flat in early European session on Monday, trading in a tight range around the 0.6600 mark.

The US Dollar regained strength against its major peers on Friday after the latest report by the US Labor Department showed a faster-than-expected job growth in July, which, to a certain extent, allayed investor concerns over the country’s labor market.

However, the greenback struggled to hold those gains at the start of the new week, as uncertainty over the next US fiscal support package to address the impact from the COVID-19 pandemic continued.

House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin said over the weekend they were open to restart coronavirus aid discussions, while US President Trump on Saturday signed executive orders and memorandums aimed at unemployment benefits, evictions, payroll taxes and student loans following weeks of no agreement between White House officials and congressional Democrats.

Kiwi traders now eye the outcome of Reserve Bank of New Zealand’s policy meeting on Wednesday as well as the scheduled resumption of trade negotiations between the United States and China on August 15th, which had been at a standstill for months.

As of 6:51 GMT on Monday NZD/USD was inching down 0.03% to trade at 0.6597, while moving within a daily range of 0.6592-0.6613. The major pair advanced 2.70% in July, which marked its fourth straight month of gains.

On today’s economic calendar, the number of job openings in the United States probably decreased to 4.910 million in June, according to market expectations, from 5.397 million in May. The latest figure reflected only a limited resumption of economic activity that had been cut down in March and April because of the pandemic. The official report is 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 12.4 basis points (0.124%) as of 6:15 GMT on Monday, or unchanged compared to August 7th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – 0.6626
R1 – 0.6663
R2 – 0.6728
R3 – 0.6765
R4 – 0.6802

S1 – 0.6562
S2 – 0.6525
S3 – 0.6460
S4 – 0.6396