NZD/USD: Bears beating down the doors of July's support structure

• The bird is trading on the offer as risk sentiment sours into the closing session fo the week.
• NZD/USD is testing the commitments of the bulls in the July support structure.

NZDNZD/USD is currently trading at 0.6532 between a range of 0.6527 and the high of 0.6578 and losing 0.57% on the day and we head towards 

NZD/USD has been sliding in recent trade and suffering from a slight risk-off tone in markets.

The US and China have been kicking-up the dust in a war of words pertaining to the Hong-Kong executive order and the dispute over the South China Sea.

• The US State Department said Monday that most of Beijing’s claims in the sea are “completely unlawful.”
• The Chinese embassy in the US responded Tuesday by saying the U.S. move turns the South China Sea into a tense situation.

RBNZ's work is cut out

Closer to home, the Consumer Price Index for the second quarter was a touch stronger when it came in at -0.5% QoQ vs -0.6%.

However, there were no great shakes.

"A volatile read on quarterly inflation with evidence that there’s more volatility to come. Looking through the noise, there is also confirmation in these data that the underlying inflation pulse is weak," analysts at ANZ Bank explained.

 
The elevated NZD, weak global inflation, record-low inflation expectations, and spare capacity opening up in the labour market mean the RBNZ has its work cut out. Without further action or a significant change in the economic outlook, the risk of a persistent inflation undershoot is likely to materialise.

NZD/USD levels

NZD/USD is toppy while testing out the support structure put in place after the first week of July with the southern part of the 0.65 level.