NZD/USD fails to cheer upbeat China Caixin PMI, remains below 0.6000

• NZD/USD remains below 0.6000, despite the latest bounce, after China data.
• Downbeat comments from New Zealand Finance Minister, pessimistic calls due to the virus earlier weighed on the pair.
• A light economic calendar will keep COVID-19 headlines in the drive’s seat.

Although China’s Caixin Manufacturing PMI followed the footsteps of official activity data, NZD/USD remains on the back foot below 0.6000, currently around 0.5950, during early Wednesday.

Read: China Caixin/IHS Markit Manufacturing PMI, March, jumps to 50.1 (vs 40.3 in Feb, poll 45.5)

The reason for the pair’s failure to cheer the data from China could be traced from pessimism surrounding the coronavirus (COVID-19). New Zealand (NZ) Treasury spread worries concerning the economic impact of the virus and offered weakness to the Kiwi pair during the early-Asia. In his Parliamentary appearance, NZ Finance Minister Grant Robertson anticipated a yearly contraction of 10% in Q2 2020 GDP as well as a double-digit unemployment rate versus the previous month’s 4.0% mark.

Also contributing to the pair’s weakness could be the US President Donald Trump’s indication of tough two weeks and the White House expectations of 100,000 to 240,000 deaths due to the deadly disease. Additionally, numbers suggesting more than 1,000 deaths due to the virus in New York City also strengthened the fears.

As a result, the market’s risk-tone remains heavy and exert downside pressure on the pair. While portraying the same, the US 10-year treasury yields drop to 0.661%, down four basis points (bps) whereas Japan’s NIKKEI mark 1.53% losses to 18,630 by the press time.

Given the virus headlines’ major impact on the global markets, coupled with a lack of data/events ahead of the US session, investors will keep eyes on the qualitative catalysts for near-term direction. In doing so, the COVID-19 updates will be the key to watch.

Technical analysis

While 10-day SMA near 0.5875 is on the seller’s radar, buyers will look for entry beyond 21-day SMA, currently around 0.6020.