NZD/USD holds on to recovery gains at start of the FOMC-day
|- NZD/USD stays in the positive territory, supported partly by upbeat GDT Price Index.
- Recovery in the market’s risk sentiment also favors commodity-linked currencies.
- NZ Current Account, trade/political headlines can offer intermediate direction ahead of the Fed’s decision.
With the receding pessimism concerning Saudi Arabia’s oil production joining upbeat economic calendar and trade headlines, NZD/USD remains on the plus side while taking rounds to 0.6360 at the start of Wednesday’s Asian trading session,
The Kiwi pair initial benefited from the trade-positive headlines concerning the US-Japan and the US-China as the US has already signed an initial trade deal with Japan and Chinese delegates will reach the US for 13th round of initial talks. The risk-recovery gained additional support from the Saudi Arabian communication that they will be back to 70% capacity in two to three weeks, rather than initially anticipated months of recovery, after the drone attack that damaged half of its production.
Adding to the optimism was better than forecasted -1.7% reading of New Zealand (NZ) GDT Price Index to 2.0%.
As a result, Wall Street closed in the positive territory while the US Treasury yields also remained less vulnerable. However, the market’s wait and see mode ahead of the key event kept the risk tone under check.
Given the start of the crucial day, Asian traders are expected to remain on the sidelines with NZ Second Quarter (Q2) Current Account, expected $-1.117B versus $0.675B prior, likely offering initial second-tier boost to the market. However, major attention will be given to the US Federal Open Market Committee’s (FOMC) monetary policy decision where it is expected to cut the Fed rate by 0.25% with likely hints for further rate reductions in late-2019 and 2020 as well.
Technical Analysis
21-day exponential moving average (EMA) level of 0.6390 acts as an immediate resistance ahead of fueling the quote to 0.6452/60 area including monthly top and 50-day EMA. Meanwhile, a downside break below the month-start top of 0.6320 could drag the prices to 0.6270.
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