NZD/USD extends correction from multi-month highs, trades below 0.6600
- Upbeat business sentiment data fails to help NZD.
- US Dollar Index stays above 97 ahead of mid-tier data.
- Sour market mood weighs on risk-sensitive currencies on Tuesday.
The NZD/USD pair spent the Asian trading hours moving sideways near the 0.6600 handle despite the upbeat business sentiment data from New Zealand and came under renewed bearish pressure in the second half of the day. As of writing, the pair was trading at 0.6578, erasing 0.27% on a daily basis.
The ANZ Business Confidence Index in December improved to -13.2 from -26.4 in November and came in better than the market expectation of -13.6. Additionally, the ANZ Activity Outlook rose to 17.2% in the same period from 12.9%.
What's next in US-China trade war?
Nevertheless, with the euphoria of the US-China phase-one trade deal fading away amid the murky details, the NZD struggles to find demand. Furthermore, investors seem to be doubting China's ability to ramp up agricultural imports from the US as a precondition of tariff reduction.
In a recently published report, Fitch Ratings argued there was a significant risk of a renewed escalation of US-China trade tensions. "The trend in China's domestic demand may further complicate efforts to raise imports from the US," Fitch added.
During the American session on Tuesday, Housing Starts, Building Permits and Industrial Production data will be released from the United States. The US Dollar Index, which closed the day virtually unchanged at 97.15 on Monday, is posting small daily losses at 97.10. Later in the day, Current Account data from New Zealand will be looked upon for fresh impetus as well.
Technical levels to watch for