NZD/USD stays above 21-day EMA amid trade optimism, eyes on China data

• NZD/USD benefits from trade-positive headlines concerning the US-China deal.
• Greenback weakness, on the back of broader risk-on, adds to the pair’s strength.
• China’s Trade Balance can offer immediate direction, US markets off for Columbus Day.

The partial trade deal between the US and China and weaker US Dollar (USD), mainly due to the broad risk-on sentiment, please the NZD/USD buyers as the pair takes the bids to 0.6335 at the start of the week’s Asian trading session.

Thursday night’s news concerning the US-China agreement over the “Phase One” of the much-awaited trade deal has been the basis for commodity-linked currencies’ recent run-up. Both the world’s largest economies agreed, in part, over key issues like the currency pact and delay in tariffs. However, clear directions to the trade team are yet to roll out and hence a cautious optimism prevails among the global trade watchers.

Recently, the United States’ (US) President Donald Trump conveyed optimism surrounding the trade discussions with China. Though, uncertainty surrounding the Republican leader’s tariff increase, as observed through mixed signals from the Treasury Secretary Steve Mnuchin and Trade Representative Robert Lighthizer, seems to raise doubts over smooth running over the second stage of talks.

It should also be noted that the overall risk-on sentiment weighs on the greenback and adds to the pair’s strength while supporting Antipodeans.

Moving on, the US markets are off for the Columbus Day but September month trade data from China could offer immediate direction to the Kiwi pair. Forecasts suggest soft figures of $33.30B versus $34.83B (revised) for the headline Trade Balance with Imports likely being recovered to -5.2% from -5.6% but the Exports bear downbeat consensus of -3% against -1% prior.

Technical Analysis

The 21-day exponential moving average (EMA), at 0.6317 now, offers immediate support to the pair before dragging it to 0.6276/70 rest-area including lows marked on September 03 and October 10 while also comprising October-start highs. On the upside, the 50-day EMA level of 0.6373 holds the key to pair’s run-up towards 0.6400 and September month tops nearing 0.6450.