NZD/USD consolidating Tuesday's strong up-surge to 5-week highs
|The NZD/USD pair came under some selling pressure on Wednesday and retreated a bit from 5-week peak, primarily led by profit-taking and broad based greenback recovery.
Currently trading around 0.7195 region, off around 15-pips from session low, the pair ran through some fresh offers after the US CPI rose 0.3% in December, taking the yearly rate to 2.1%, while core CPI rose 0.2% with yearly rate holding steady at 2.2%. Upbeat CPI reading kept hopes of further Fed rate-hike actions in 2017 alive and helped the US Dollar to hold on to its recovery move from previous session's slump.
Other data released from the US showed manufacturing activity rebounded in December, with industrial production surpassing even the most optimistic estimates to post a strong growth of 0.8% for December, best since Jan. 2016. Also the capacity utilization rose more-than-expected to 75.5% in December as compared to previous month's 75.0% and 75.3% expected.
A batch of upbeat US economic data also lifted US treasury bond yields across all maturities and exerted some selling pressure around the higher-yielding currencies - like the Kiwi. The corrective slide, however, was limited as investors await for more clarity on Trump’s fiscal policy details before reestablishing a more noticeable long-term direction for the pair.
Later during NY trading session, various Fedspeaks, including the Fed Chair Janet Yellen would be scrutinized for fresh insight over the central bank's monetary policy outlook and could also provide some fresh impetus for short-term traders.
Technical outlook
Omkar Godbole, Analyst and Editor at FXStreet notes, "Kiwi bulls are set to reassert their dominance and challenge supply around 0.7260 (resistance offered by the rising trend line drawn from Jan 2016 low and May 2016 low)."
He further writes, "This is evident from Tuesday’s sharp rally. Fresh bids are anticipated on dips, while bearish invalidation is seen only below 0.7148 (Monday’s high)."
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