Forex Market: NZD/USD eases from one-week highs as US President Trump tests positive for COVID-19, US stimulus optimism cools

NZD/USD eased from Thursday’s one-week high and looked set to snap a five-day streak of gains on Friday, as risk sentiment dampened following reports that US President Trump tested positive for COVID-19.

In a tweet, Trump said that he and first lady Melania would enter quarantine after Hope Hicks, a senior advisor who had recently traveled with the president, caught the disease.

“Will the next presidential townhall debate on the 15th now take place? Seems this is Trump’s out if he wanted one,” Pepperstone analyst Chris Weston said.

Riskier currencies slid, while the US Dollar firmed also as House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have not so far managed to overcome “differences over dollars and values” to secure a coronavirus aid deal. Their recent negotiations were regarded by analysts as a last-gasp effort to come to an agreement on fiscal stimulus prior to the November 3rd presidential election.

“Markets surely remain susceptible to the lack of a deal this side of the election,” Ray Attrill, head of foreign exchange strategy at National Australia Bank, said.

As of 6:54 GMT on Friday NZD/USD was edging down 0.11% to trade at 0.6640, easing from Thursday’s one-week high of 0.6657. The major pair was still poised for a weekly gain, being up 1.51%. It retreated 1.80% in September, while snapping a five-month streak of gains.

Today’s market focus will be on the more comprehensive non-farm payrolls report, which reflects employment in US public and private sectors. Employers in all segments of US economy, excluding the farming industry, probably added 850 000 new jobs in September, according to market expectations, after a job gain of 1.371 million in August.

Meanwhile, the rate of unemployment in the country probably decreased to 8.2% in September, according to estimates, from 8.4% in August. The official government report is due out at 12:30 GMT.

Additionally, the monthly survey by Thomson Reuters and the University of Michigan may show that US consumer confidence continued to improve in September. The final index reading, which usually comes out two weeks after the preliminary data, probably came in at 79.0, up from a preliminary value of 78.9. The latter has been the highest index reading since March. In August, the consumer sentiment index stood at a final 74.1.

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 5.9 basis points (0.059%) as of 6:15 GMT on Friday, down from 6.7 basis points on October 1st.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – 0.6638
R1 – 0.6667
R2 – 0.6687
R3 – 0.6717
R4 – 0.6747

S1 – 0.6618
S2 – 0.6588
S3 – 0.6568
S4 – 0.6549