NZD/USD fades recovery moves around 0.6900 as risks battle virus woes

• NZD/USD flirts with 0.6900 after bouncing off 0.6875.
• New Zealand PPI data for Q3 came in mixed, GDT data improved earlier.
• Rising covid cases dim early optimism led by vaccine hopes.
• Virus updates, US stimulus news become the key amid no major data/events at home.

NZD/USD wavers around 0.6900, ease to 0.6891 off-late, during the early Wednesday morning in Asia. In doing so, the pair fizzles retreat from 0.6875 as recent updates from New Zealand’s (NZ) Producer Price Index (PPI) for Input and Output came in mixed for the third quarter (Q3). Also weighing on the pair could be downbeat trading sentiment amid rising coronavirus (COVID-19) worries and uncertainty over the US stimulus.

While NZ PPI Input grew beyond -1.0% prior to 0.6% on QoQ, PPI Output reprinted -0.3% quarterly figures for the Q3. Before a few hours, NZ GDT Price Index recovered from -2.0% to +1.8% versus -3.5% market consensus.

Other than the mixed data, rising cases of the COVID-19 in the US also challenges the market sentiment and the Antipodeans. As per the latest update from CBS News, “There is now aggressive, unrelenting, expanding broad community spread across the country, reaching most counties, without evidence of improvement but rather, further deterioration."

Furthermore, the US policymakers are yet to justify that the Democratic victory is good for the much-awaited covid stimulus, which in turn exerts an additional burden on the trading sentiment.

Against this backdrop, Wall Street marked mild losses by the end of Tuesday’s trading whereas the US 10-year Treasury yields dropped five basis points (bps) to 0.85% by press time.

Moving on, a lack of major data/events will keep the risk catalysts in the spotlight. As a result, virus updates and vaccine news will be the key to watch while also keeping eyes on the US aid package news.

Technical analysis

While the monthly support line near 0.680 offers an immediate challenge to the NZD/USD sellers, any further downside can be termed tepid unless breaking the 0.6800 round-figure comprising September top. Meanwhile, 0.6920 and the early 2019 peak surrounding 0.6945 offer immediate resistance ahead of December 2018 high near 0.6970 and the 0.7000 psychological magnet.