NZD/USD holds above the 21 4-HR MA

NZD/USD is currently trading at 0.6420, down 0.11% on the day with the price slipping from a high of 0.6433 to a low of 0.6413. The US dollar has been weighing on its rivals on solid US data before North America packs up for the Thanksgiving holidays. 

On Thursday, US stocks and the US bond market will also be closed on Thursday in observance of Thanksgiving. While FX markets remain open,  it will likely be a quiet time into month-end as, on Friday, the New York Stock Exchange and the Nasdaq will resume normal trading hours but will close early at 1 p.m. ET. 

Meanwhile, diminished trade worries and improved global industrial signals have underpinned the USD and today's domestic data helped the DXY to firm in the 98 handle which ultimately weighed on the bird. There were a number of data releases but the Federal Reserve's preferred inflation measure, Personal Consumption Expenditures, YoY, beat expectations at 1.3% vs 1.2% expected while MoM came in line with expectations at 0.1% but beat the prior 0%. This resulted in a rise in US Treasury yields with the ten-year yield rising over 1% on the day as well as supporting the dollar. However, despite a stronger greenback, commodities also rebounded at the beginning of this week, notably in base metals and oil, which have likely given some support to the antipodeans. 

Focus on trade supportive of risk sentiment 

There has been a focus on trade deal progress and, yesterday, US President Trump stated that the so-called 'phase-one' negotiations were in the 'final throes'. This followed upbeat headlines where Chinese consensus had been reached on properly solving relevant issues. "Recently, trade concerns have resurfaced on Congress passing a bill supporting protesters in Hong Kong but so far Trump has not given any signs of whether he plans to sign the bill," analysts at Danske Bank acknowledged. 

For now that is taken as good news as the two parties negotiate on the final key matters, which according to sources are intellectual property rights, Chinese purchases of agricultural goods and not least the rollback of existing tariffs.

RBNZ in focus

Meanwhile, the RBNZ Financial Stability Report (FSR) passed with little fanfare yesterday and the focus now turns to the RBNZ’s final bank capital decision, due next Thursday 5 December. "The market will be interested to see if there is any softening to the initial proposals following the round of public consultations," analysts at ANZ Bank explained.

The FSR noted that the RBNZ is considering alternative capital options, refining its costs and benefits analysis, re-considering interest rate impacts, and assessing transitional impacts in light of feedback received. Time will tell.

NZD/USD levels

Bulls are testing trend line resistance and price is supported by the 21 4-hour moving average with the 200-hour moving average extending in a bullish trajectory.