NZD/USD continues to push higher toward 0.7100 on risk flows
- NZD/USD is posting strong gains after closing flat on Tuesday.
- Risk flows take control of financial markets on Wednesday.
- US Dollar Index turns south ahead of mid-tier data.
After testing 0.7000 earlier in the week, the NZD/USD pair stayed in a consolidation phase and closed flat on Tuesday. With the risk-sensitive kiwi starting to capitalize on the upbeat market mood, the pair turned north and easily erased all of its weekly losses. As of writing, NZD/USD was up 0.65% on the day at 0.7086.
DXY loses traction on Wednesday
Heightened hopes for US lawmakers reaching an agreement on the $900 billion worth of additional stimulus seems to be providing a boost to market sentiment mid-week. Additionally, investors remain optimistic that British Prime Minister Boris Johnson and European Commission President Ursula von der Leyen will be able to make progress toward a trade deal when they meet later in the day.
Reflecting the risk-on market environment, major European equity indexes are up between 0.45 and 1.02% on the day. Moreover, She &P 500 Futures gain 0.2%, suggesting that the S&P 500 Index could hit, yet another, all-time high after the opening bell.
On the other hand, the greenback seems to have lost interest as a safe-haven. At the moment, the US Dollar Index (DXY) is down 0.22% on the day at 90.76, helping NZD/USD preserve its bullish momentum.
The Wholesale Inventories and the JOLTS Job Openings data will be featured in the US economic docket. Nevertheless, investors' risk perception is likely to remain the primary driver of USD's market valuation and NZD/USD's movements in the second half of the day.
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
