NZD/USD pops and drops on NZ PM Ardern, breaches 0.6950

• NZ politics, RBNZ review and reform – Key driver in Asia
• Focus shifts to NZ trade balance

The NZD/USD pair witnessed good two-way businesses in Asia, initially spiking higher above 0.70 handle on NZ PM Ardern’s comments, only to reverse sharply to test the midpoint of 0.69 handle.

NZD/USD: Eyes on Aus CPI

The Kiwi saw a knee-jerk upward spike to 0.7005 highs after New Zealand PM Ardern said that she is committed to fiscal responsibility, while signing the coalition pact with NZ First. However, the spike soon faded on Ardern’s take on the Reserve Bank Act, citing that she will focus on employment and price stability in its Reserve Bank Act reform and review.

However, the retreat in the spot may appear limited amid ongoing weakness in the US dollar across its main competitors, while positive oil prices continue to offer some support to the resource-linked NZD.

Markets now look forward to the US flash manufacturing and services PMI reports for further momentum, as developments around the NZ political environment will continue drive the pair in the day ahead.

NZD/USD Levels to consider

The NZD breached 0.6950 support, below which 0.6900 (round number) and 0.6837/16 (May lows) are key near-term downside areas. To the topside, a test of 0.6972 (5-DMA) due on the cards, which could open doors towards 0.7000 (natural resistance).