NZD/USD: Under pressure below 0.6050 following New Zealand data

• NZD/USD fails to hold onto recovery gains from the multi-year low.
• New Zealand’s (NZ) Westpac consumer survey data dropped below prior and average.
• The NZ government’s ‘business continuity’ package at 01:00 GMT is in focus.

NZD/USD extends the recent pullback from Monday’s peak of 0.6130 while taking rounds to 0.6040 at the start of Tuesday’s Asian session. The kiwi pair earlier benefited from the US dollar’s broad weakness while New Zealand’s first quarter (Q1) Westpac Consumer Confidence seems to hurt the latest moves. Traders will now keep eyes on Jacinda Ardern-led government’s stimulus for fresh direction.

New Zealand’s Westpac Consumer Survey (Q1) dropped from 109.9 before 104.20. The consumer confidence not only lagged behind the previous readouts but also slipped below the average of 111.00. Concerning this, Westpac said, “With New Zealand wrestling with the twin headwinds of Coronavirus and drought, consumer confidence has fallen to below-average levels.”

Despite the RBNZ’s surprise move of a 0.75% rate cut the previous day, the pair benefited from the broad US dollar weakness. The reason could be traced from the market’s fear spread through the Fed’s 100 basis points (bps) rate cut and $700 billion Quantitative Easing (QE). Additionally, global measures to contain the coronavirus (COVID-19) also seem to weigh on the market’s risk-tone.

That said, Wall Street portrayed the bloodbath with benchmarks down more than 10% each while the US 10-year treasury yields marking nearly 20 bps of a drop to 0.74% at the end of their closing ticks for Monday.

Recently adding to the market’s risk aversion could be comments from US President Donald Trump who said that the worst of coronavirus outbreak 'could be over by July or August or later.

Looking forward, investors will be highly interested in the New Zealand government’s ‘business continuity’ package, to be announced on 01:00 GMT Tuesday. “NZ’s unfamiliarity with the unconventional policy is likely contributing to the market underestimating the size of the QE that might be coming,” said analysts at the Australia and New Zealand Banking Group (ANZ). “Should the Government stick to the targeted approach today, we’d see this as more of a phase one response, given a broader policy response will be needed to facilitate the eventual economic recovery,” also mentions the ANZ report.

Technical Analysis

The pair is less likely to attract the buying interest unless successfully clearing October 2019 low near 0.6200.