Market news

20 December 2021

NZD/USD remains vulnerable to refresh 2021 low as Omicron sours sentiment

  • NZD/USD remains pressured around yearly low, recently sidelined.
  • Risk sentiment remains sour as virus variant spread fears of fresh activity measures during holiday season.
  • Delay in US stimulus, Sino-American tussles add to risk-off mood, PBOC fails to placate fears.
  • Light calendar ahead, qualitative catalysts are crucial for fresh impulse.

NZD/USD defends 0.6700 threshold, teasing the yearly low while retreating to 0.6710 during early Tuesday morning in Asia. The kiwi pair dropped for the second consecutive day on Monday as fears over the South African covid variant, Omicron, escalated while the deadlock over the US Build Back Better (BBB) plan adds to the risk-aversion, weighing on the Antipodeans.

After an initial rejection of the Omicron fears, global leaders are all worried over the COVID-19 variant that pushes some of the leading economics, like the UK and Europe, to recall strict activity restrictions during the holiday season. The fears of Omicron were recently backed by the World Health Organization (WHO) while saying, “The Omicron variant of the coronavirus is spreading faster than the Delta variant and is causing infections in people already vaccinated or who have recovered from the COVID-19 disease,” per Reuters.

In New Zealand, the weather conditions are a bit favorable but the cases are gradually rising. “As of Monday there were 22 cases of Omicron in MIQ in New Zealand,” said NZ Herald. The Pacific nation targets Australia’s 90% vaccination rate to battle the virus strain.

Elsewhere, US President Joe Biden’s much-awaited BBB stimulus plan gets a rejection from Senator Joe Manchin, making it hard to cross the House considering the Republicans’ readiness to avoid favoring the plan and Democrats’ wafer-thin majority. Even so, House Speaker Nancy Pelosi and US President Biden stay hopeful of getting the aid package through during early 2022.

It’s worth noting that the US-China tussles escalated and offer another negative for the NZD/USD prices, considering New Zealand’s close trade ties with Beijing. Recently, Chinese foreign minister Wang Yi said, per Reuters, "If there is confrontation, then (China) will not fear it, and will fight to the finish." China’s Wang Yi adds, "There is no harm in competition but it should be ‘positive’”. On the same line were fears of the Fed rate-hike, backed by Fed Board of Governors member Christopher Waller, also weigh on the NZD/USD.

Amid these plays, US Treasury yields posted 2.3 basis points (bps) of an upside after declining to the monthly lows. Further, the Wall Street benchmarks also posted losses but the commodities traded mixed, with oil down and gold up.

Looking forward, New Zealand’s Credit Card Spending for November, expected -2.1% YoY versus -5.6% prior, will entertain NZD/USD traders but major attention will be given to risk catalysts for clear direction.

Technical analysis

NZD/USD pullback from 100-EMA joins bearish MACD signal and downbeat RSI line, not oversold, to keep sellers hopeful of refreshing the yearly bottom, currently around 0.6700.

In doing so, 61.8% Fibonacci Expansion (FE) of November 23 to December 16 moves, around 0.6670, will offer an intermediate halt during the likely slump towards November 2020 low near 0.6590.

Meanwhile, an upside clearance of the 100-EMA level of 0.6800 isn’t a green pass to the NZD/USD bulls as a one-month-old horizontal line near 0.6860 and the 200-EMA close to 0.6870 will be crucial hurdles before welcoming the bulls.

 

Market Focus

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

Open Demo Account
I understand and accept the Privacy Policy and agree that my name and contact details can be used by TeleTrade to contact me about the information I have selected.
23 International Awards
Have a question?

We are ready to assist you in every step of your trading experience
by providing 24/5 multilingual customer support.

Follow us

Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.

© 2011-2022 Teletrade-DJ International Consulting Ltd

Teletrade-DJ International Consulting Ltd is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11.

The company operates in accordance with the Markets in Financial Instruments Directive (MiFID).

The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Teletrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.

TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.

Please read our full Terms of Use.

To maximise our visitors' browsing experience, TeleTrade uses cookies in our web services. By continuing to browse this site you agree to our use of cookies.

Teletrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Choose your language/location