- NZD/USD draws some support from subdued USD demand, through lack follow-through.
- A positive risk tone, along with a further decline in the US bond yields, undermines the USD.
- The uncertainty over the Fed’s rate hike path holds back traders from placing directional bets.
- Investors also seem reluctant ahead of Fed Chair Jerome Powell’s speech later this Wednesday.
The NZD/USD pair struggles to capitalize on the overnight late rebound from the 0.5910 area, or the weekly low and remains on the defensive through the Asian session on Wednesday. Spot prices currently trade around the 0.5930 region and seem vulnerable to extending this week's rejection slide from the 0.6000 psychological mark, or the highest level since October 12 touched on Monday.
The US Dollar (USD) takes a brief pause and consolidates its strong recovery gains registered over the past two days, which, in turn, is seen lending some support to the NZD/USD pair. Declining US Treasury bond yields, along with a generally positive risk tone, keep a lid on the safe-haven buck. Traders, however, seem reluctant to place aggressive bets and prefer to wait for fresh cues about the Federal Reserve's (Fed) future rate-hike path.
Investors seem convinced that the US central bank is nearing the end of its rate-hiking cycle and the bets were reaffirmed by the softer US monthly employment details released last Friday. That said, a slew of Fed officials this week acknowledged the US economic resilience and left the door open for additional rate hikes. Hence, Fed Chair Jerome Powell's speech will be looked for hints about the next policy move, which will drive the USD demand.
In the meantime, growing concerns about the worsening economic conditions in China – further fueled by rather unimpressive Chinese Trade Balance data on Tuesday – might continue to act as a headwind for antipodean currencies, including the Kiwi. Apart from this, expectations that the Reserve Bank of New Zealand (RBNZ) will keep its policy rate unchanged in November suggests that the path of least resistance for the NZD/USD pair is to the downside.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD nears 1.0800 on broad US Dollar weakness
Optimism continues to undermine demand for the American currency ahead of the weekly close. EUR/USD hovers around weekly highs just ahead of the 1.0900 figure.
GBP/USD reconquers 1.2500 with upbeat UK GDP
Following BOE-inspired slump on Thursday, the British Pound changed course and trades around 1.2530. Better-than-anticipated UK GDP and a weaker USD behind the advance.
Gold resumes advance and trades above $2,370
XAU/USD accelerated its recovery on Friday, as investors drop the USD. Dismal US employment-related figures revived hopes for a soon-to-come rate cut from the Fed.
XRP tests support at $0.50 as Ripple joins alliance to work on blockchain recovery
XRP trades around $0.5174 early on Friday, wiping out gains from earlier in the week, as Ripple announced it has joined an alliance to support digital asset recovery alongside Hedera and the Algorand Foundation.
Week ahead – US inflation numbers to shake Fed rate cut bets
Fed rate-cut speculators rest hopes on US inflation data. After dovish BoE, pound traders turn to UK job numbers. Will a strong labor market convince the RBA to hike? More Chinese data on tap amid signs of slow Q2 start.