- NZD/USD plunges slightly below 0.6200 as PBoC maintains interest rates steady.
- The safe-haven bets have strengthened amid geopolitical tensions.
- Market participants will focus on the US Retail Sales data.
The NZD/USD pair faces an intense sell-off as the People’s Bank of China (PBoC) has kept the medium-term lending facility rates surprisingly unchanged at 2.5%. The market participants were anticipating a dovish interest rate decision by the PBoC amid an uneven recovery post-pandemic.
A steady monetary policy stance by the PBoC has deepened fears of a decline in credit growth, which would dampen overall economic prospects further. Being a proxy to the China’s economic prospects, the New Zealand Dollar was heavily dumped by market participants.
S&P500 futures have generated some losses in the early New York session, portraying a decline in the risk-appetite of the market participants. The risk-perceived assets are facing the consequences of high volatility induced by long weekend in the United States economy on account of Martin Luther King Birthday.
Meanwhile, deepening Middle East tensions have improved the appeal for safe-haven assets significantly. The US Dollar Index (DXY) has climbed to near 102.60 amid hopes that optimism about Federal Reserve (Fed) taking down interest rates will fade sooner as other central banks are also expected to start reducing borrowing costs sooner.
Going forward, market participants will focus on the monthly US Retail Sales data for December, which will be published on Wednesday. As per the expectations, consumer spending rose by 0.4% against 0.3% growth in November. Retail Sales excluding automobiles grew steadily by 0.2%.
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