NZD/USD pares early gains, trades below 0.6550
|- Upbeat inflation data from China helps antipodeans gain traction.
- US Dollar Index edges lower toward 97.50 handle.
- Coming up: NFIB Business Optimism Index and Unit Labor Cost data from US.
The NZD/USD pair closed the first day of the week with small losses and staged a recovery during the Asian trading hours. However, the pair seems to be gathering momentum in either direction ahead of this week's key events and was last seen trading at 0.6548, where it was virtually unchanged on a daily basis.
Earlier in the day, the data from China showed that inflation, as measured by the Consumer Price Index (CPI), rose to 4.5% on a yearly basis in November from 3.8% and beat the market expectation of 4.2% to help antipodeans find demand.
Markets stay calm ahead of FOMC
Nevertheless, the lack of fresh developments surrounding the US-China trade conflict forces investors to remain on the sidelines for the time being. Additionally, the Federal Open Market Committee's (FOMC) December meeting, which is likely to significantly impact the USD's market valuation, will kick off today and monetary policy decisions alongside the updated economic projections will be released on Wednesday.
Previewing this event, "we continue to see the risks skewed towards more rate cuts before an eventual hike. While Friday’s jobs numbers were fantastic other data suggest that the US economy is slowing," said ING analysts. "Capital expenditure has contracted in both 2Q and 3Q19 with the durable goods report hinting at a likely third consecutive fall in 4Q19.”
Later in the day, the NFIB Business Optimism Index, Nonfarm Productivity and Unit Labor Costs data from the US will be looked upon for short-term catalysts. Ahead of these data releases, the US Dollar Index is down 0.1% on the day at 97.55.
Technical levels to watch for
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