NZD/USD consolidates in a range near weekly tops, comfortable above 0.6300 handle

The NZD/USD pair extended its sideways consolidative price action through the Asian session on Friday and remained confined in a narrow trading band, just below weekly tops set in the previous session.
 
Following an early dip to one-week lows, the pair staged a goodish rebound on Thursday and was being supported by optimism over US-China trade talks. The top negotiators from both sides began negotiations on Thursday and signalled that they may reach a partial deal, which could lead to a temporary truce on tariffs and underpinned demand for perceived riskier currencies – like the Kiwi.

Trade optimism continues to underpin

Apart from the positive trade-related developments, the prevalent US Dollar selling bias further collaborated to the pair's mildly positive tone through the Asian session on Friday. Despite a goodish follow-through pickup in the US Treasury bond yields, the Greenback remained on the defensive amid firming expectations that the Fed will eventually cut interest rate at its upcoming meeting in October.
 
Thursday's softer US consumer inflation figures, showing that the headline CPI was unchanged in September and the core CPI rose by just 0.1% from the previous month, reinforced prospects for a further monetary policy easing by the Fed. Meanwhile, data released on Friday showed that New Zealand’s manufacturing activity shrank for a third month in September and seemed to be the only factors capping gains.
 
It will now be interesting to see if the pair is able to capitalize on the overnight positive move or once again meets with some fresh supply near the 0.6335 resistance zone. Market participants now look forward to the US economic docket – featuring the release of Prelim UoM Consumer Sentiment – for some short-term trading impetus later during the early North-American session.

Technical levels to watch