Forex Today: RBNZ surprises with 50 bps hike, eyes on key US data

Here is what you need to know on Wednesday, April 5:

The US Dollar seems to have stabilized early Wednesday after having suffered heavy losses on Tuesday. The New Zealand Dollar gathers strength against its rivals on unexpected central bank action and the mood remains cautious. Private sector employment data from the US alongside February trade balance figures will be featured in the US economic docket. The ISM will also release the Services PMI survey for March.

The Reserve Bank of New Zealand (RBNZ) announced earlier in the day that it raised the official cash rate (OCR) by 50 basis points (bps) from 4.75% to 5.25%, compared to the market expectation for a 25 bps hike. In its policy statement, the RBNZ noted that risks to inflation pressure from fiscal policy were seen to be skewed to the upside and added that labor market was still strong. With the initial reaction, NZD/USD climbed to its highest level since mid-February at 0.6375 before retreating modestly. In the European morning, the pair was up 0.6% on the day at 0.6350.

Following the Reserve Bank of Australia's (RBA) decision to keep the policy rate unchanged, RBA Governor Philip Lowe explained on Wednesday that the decision to hold rates steady does not necessarily imply that rate hikes are over. Lower further added that it is common practice to move rates multiple times, then wait for a while and move again if necessary. AUD/USD, however, struggled to capitalize on these hawkish remarks and was last seen trading in negative territory below 0.6750.

The disappointing job openings and factory orders data from the US weighed on the US Dollar on Tuesday and the US Dollar Index declined to a fresh two-month low of 101.47 before steadying slightly above 101.50 early Wednesday. Employment in the US private sector is forecast to rise by 200,000 in March and the ISM Services PMI is expected to edge lower to 54.5 from 55.1 in February. Meanwhile, the 10-year US Treasury bond yield stays below 3.4% and US stock index futures trade virtually unchanged on the day.

US ADP Jobs/ISM Service PMI Preview: Slowing but still positive.

EUR/USD advanced to its strongest level since early February above 1.0970 but returned to the 1.0950 area on Wednesday. The data from Germany showed that Factory Orders rose by 4.8% on a monthly basis in February, surpassing the market expectation for an increase of 0.3% by a wide margin.

GBP/USD climbed above 1.2500 for the first time since June on Tuesday. The pair stays in a consolidation phase a few pips below that level early in the European morning.

Gold price gathered bullish momentum after clearing $2,000 resistance on Tuesday and extended its rally to a fresh multi-month high above $2,020. XAU/USD is yet to stage a technical correction but modest recovery in US T-bond yields seem to be limiting the pair's upside for the time being.

Bitcoin registered modest gains on Tuesday and continued to stretch higher early Wednesday. BTC/USD was last seen rising more than 1% on the day at $28,540. Ethereum gathered bullish momentum and broke out of its two-week-old trading range on Tuesday. At the time of press, ETH/USD was trading at its highest level since August at $1,913, gaining 2.2% on a daily basis.