NZD/USD stays directed to 0.6700 despite firmer New Zealand Trade Balance

• NZD/USD remains depressed near intraday low after NZ trade numbers for November.
• New Zealand Trade Balance, Exports improves, Imports rise as well.
• Fed’s Waller renewed rate hike concerns, New Zealand experts warn of a jump in virus cases.
• Light calendar, year-end holiday mood may restrict movement but bears to keep the reins.

NZD/USD shrugs off upbeat New Zealand trade numbers during early Monday morning in Asia, refreshing intraday low to 0.6737 after the data release.

Following a central-bank-led drama during the last week, fears of the coronavirus variant linked to South Africa join fresh chatters surrounding the US Federal Reserve’s (Fed) rate hike in early 2022 seem to weigh on the Kiwi pair of late.

New Zealand (NZ) Trade Balance matched forecasts of $-6.047B with $-6.040B figures while Exports and Imports both grew to $5.86B and 6.73B versus $5.36B and $6.66B revised priors in that order. Earlier in the day, a private gauge of NZ consumer confidence showed pessimists having an upper hand for Q4 data. “Westpac-McDermott Miller consumer confidence index fell to 99.1 from 102.7 in the previous quarter. A reading above 100 indicates more optimists than pessimists,” said Reuters.

On Friday, comments from Fed Board of Governors member Christopher Waller propelled the US dollar by saying, per Reuters, “The ‘whole point’ of the Fed's decision to accelerate the pace of its QE taper was to make the March Fed meeting "live" for a first rate hike.”

Also weighing on the NZD/USD prices are the chatters over a jump in the covid cases like Australia’s New South Wales (NSW). NZ Herald said, “Covid-19 modeling experts warn the highly-transmissible Omicron variant poses a serious risk to a largely unrestricted summer. Thirteen cases of the variant have now been picked up in managed isolation and quarantine.”

On a different page, escalating tensions between China and the US also challenge the Kiwi prices due to Beijing’s trade ties with Auckland.

Amid these plays, the US 10-year Treasury yields dropped 1.5 basis points (bps) to 1.41% while Wall Street benchmarks closed red on Friday.

That said, NZD/USD traders are likely to witness further downside amid the market’s rush for risk-safety and an absence of fresh catalysts on the calendar. It's worth noting that the People's Bank of China (PBOC) is up for conveying its monetary policy results at 01:30 GMT with chatters surrounding further rate cuts, which in turn may favor the kiwi pair sellers.

Technical analysis

NZD/USD fades bounce off a descending support line from March, suggesting further weakness towards retesting the stated trend line support near 0.6700. However, oversold RSI conditions hint at a bounce from the stated support line, a break of which will open doors for a downward trajectory towards late 2020 bottom near 0.6590.

On the contrary, a clear upside break of 21-DMA level near 0.6800 will need validation form September’s low close to 0.6860 before recalling the NZD/USD bulls.