NZD/USD juggles around 0.6060 after a soft recovery, US Durable Goods Orders in spotlight
|- NZD/USD has turned sideways around 0.6060 posts a soft recovery ahead of US Durable Goods Orders.
- Fed policymakers are anticipated to capitalize on tight credit conditions to weigh pressure on inflation rather than hiking interest rates further.
- RBNZ Silk advised holding rates ahead and remaining data-specific.
The NZD/USD pair is displaying a back-and-forth action after a soft recovery around 0.6070 in the early London session. The Kiwi asset is expected to extend recovery as the US Dollar Index (DXY) has shifted into the bearish trajectory amid bets favoring a pause in the rate-hike spell by the Federal Reserve (Fed).
S&P500 futures have trimmed some losses added in Asia, portraying a minor recovery in the risk appetite of the market participants. A decline in the US Dollar Index (DXY) has improved the appeal for US equities. However, the overall market mood is expected to remain cautious as the $31.4 trillion US borrowing cap limit has not increased yet.
The USD index has come under pressure as the Federal Reserve (Fed) policymakers are anticipated to capitalize on tight credit conditions to weigh pressure on inflation rather than hiking interest rates further.
For further guidance, US Durable Goods Orders data will be keenly watched. April’s Durable Goods Orders are seen contracting by 1.0% vs. an expansion by 3.2%. A contraction in the economic data indicates poor demand, which would have a ripple effect on US Consumer Price Index (CPI).
Investors should note that the US economy is facing issues of persistence in core inflation more than the headline price index. A contraction in durable goods demand would release some heat from core inflation and would be a more relieving factor for the Fed.
On the New Zealand Dollar front, Reserve Bank of New Zealand´s Assistant Governor Karen Silk noted that Cyclone Gabrielle was less inflationary than first feared and stated that rates need to stay on hold for an extended period. She said that they must be watchful of over-tightening policy and that the RBNZ can hold now and sees what develops.
Investors should note that RBNZ Governor Adrian Orr raised its Official Cash Rate (OCR) by 25 basis points (bps) to 5.5% this week.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.