• Boosted by expectations for an early RBNZ rate hike.
• US tax bill uncertainty lending additional support.
The NZD/USD pair seesawed between tepid gains/minor losses and was seen consolidating RBNZ-led spike to over 2-week highs.
The NZD gained strong bullish traction after the RBNZ left the official cash rate unchanged at record low level of 1.75% and revised up its inflation forecasts. The central bank noted that the recent fall in the domestic currency should help reach the inflation target in the second quarter of next year, clearly signaling that interest rates may need to rise slightly earlier than previously expected.
Today's mixed Chinese inflation figures - CPI and PPI, had little impact on the market. Meanwhile, a follow through US Dollar weakness, to some extent, was negated by a modest uptick in the US Treasury bond yields and contributed towards keeping a lid on any further up-move for higher-yielding currencies - like the Kiwi.
The pair kept its post-RBNZ consolidative range near mid-0.6900s as the market focus now shifts to the long-awaited US tax bill text, slated to be revealed on Thursday and should now be a key event to watch for.
• Senate Republicans to present new version of tax bill on Thursday morning - Politico
On the economic data front, the usual weekly jobless claims data from the US is unlikely to have a major impact, but would still be looked upon for some short-term trading opportunities.
Technical levels to watch
Immediate support is now pegged near the 0.6945 region, below which the pair is likely to head back towards retesting 0.6920 intermediate support en-route the 0.6900 handle.
On the upside, sustained move beyond 0.6965-70 zone should assist the pair towards reclaiming the key 0.70 psychological mark before eventually darting to its next major hurdle near the 0.7055-60 region.
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