NZD: NZD/USD - Stalls Toward 0.6000, Looks To The USD For Direction

USD/CNH tracks near 7.1725 in early Tuesday dealings, after posting little aggregate change for Monday's session. Dips in the pair under 7.1700 were supported, as broader USD indices continued to recover ground. Spot USD/CNY finished up at 7.1720, while the CNY CFETS basket tracker rose a further 0.14% to 95.73 (per BBG). CNH is maintaining a low beta with respect to broader USD gains recently. 

• For spot USD/CNH, little has changed from a technical standpoint. Upside focus will rest on a test of the 50-day EMA near 7.1940. Before that we have the 20-day EMA (close to 7.1760), but that hasn't been a strong inflection point of late. Downside focus will rest near 7.1500, which marked early July lows.
• Uncertainty around tariff outcomes, coupled with firmer US yields aided the USD through Monday. Yen lost further ground, with CNH/JPY testing above 20.60, fresh highs since May of this year.
• We had June new loans and aggregate finance data out late yesterday. Our China policy team noted: "China's total social financing rose by CNY4.2 trillion in June to hit a three-month high, nearly doubling May's CNY2.29 trillion, mainly driven by accelerated government bond sales, data released on Monday by the People's Bank of China showed."
• This followed the slightly better than expected June trade data. Still, the Citi CNY economic surprise index is back at +5.50, well off recent highs.
• Today we have Q2 GDP, with the market expecting a 0.9%q/q outcome, which leave y/y growth at 5.1% (versus 5.4% in Q1). Home prices are also out, which have showed faltering momentum recently, while June monthly activity figures are also out. Retail sales and IP will be eyed, along with fixed asset investment and property activity trends. 

The NZD/USD had a range overnight of 0.5969 - 0.5996, Asia is trading around 0.5975. The pair drifted lower overnight as the USD continued to grind out gains. US Stocks have shrugged off the latest tariff threats and instead focused on the fact Trump said he is still open to more trade negotiations. Risk is opening slightly lower this morning, E-Mini -0.10%, NQ -0.08%. NZD/USD is again probing its support just below 0.6000, lets see if it can follow through during our session. A break below this support and the market would look back towards the 0.5850/0.5900 area.

• (Bloomberg) -- “Trump indicated he is open to more trade negotiations, including with the European Union, even as he insisted that his letters threatening new tariff rates are “the deals” for US trading partners.“
• “(Bloomberg) -- “China’s economy appears to have gained momentum in the three months through June. A rebound in exports after the trade-war truce with the US in mid-May has spurred related production and service sectors. Stimulus has also helped, with a cash-for-clunkers program supporting consumer spending and public investment bolstering construction activity. We estimate GDP growth picked up to 5.6% Y/Y from 5.4% in 1Q25” 
• Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5932(NZD317m July18).
• CFTC Data shows Asset Managers added slightly to their newly built longs in NZD +9229, the Leveraged community added slightly to their shorts last week -8654.
• Data/Event : Performance Services Index, Card Spending

Fig 1: NZD/USD Spot Hourly Chart

Source: MNI - Market News/Bloomberg Finance L.P

• RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
• RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
• RES 1: 95.960 - High Apr 7
• PRICE: 95.600 @ 15:46 BST Jul 14
• SUP 1: 95.415/95.300 - Low May 15 / Low Jan 14  
• SUP 2: 95.275 - Low Nov 14  (cont) and a key support
• SUP 3: 94.707 - 1.0% 10-dma envelope

Aussie 10-yr futures traded under pressure for much of last week, keeping prices pressured and within range of the recent pullback lows. Next support undercuts at 95.420 (pierced), the Feb 13 low, ahead of 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition. To the upside, a recovery of recent losses would shift attention to resistance at 96.207, a Fibonacci retracement point.