NZD/USD pops to 0.6555 on NZ government's infrastructure spending announcement
- NZD/USD stops the previous two day’s declines after the New Zealand government’s spending announcement.
- New Zealand’s Finance Minister praises domestic economic performance while indicating fears of Brexit and the US-China trade war.
- FOMC, US CPI will join trade headlines to direct near-term pair moves.
With the New Zealand (NZ) government announcing heavy infrastructure spending, NZD/USD crosses 0.6550 by the press time of early Wednesday. The kiwi pair disturbs the previous two day's fall after the budget release.
New Zealand’s Finance Minister Grant Robertson recently announced 12 billion New Zealand dollar (NZD) of infrastructure spending during the press release of the budget. However, the government’s Half-Year Economic and Fiscal Update (HYEFU) ut the GDP forecast for 2019/20 to +2.4% (from +3.2%).
Read: N.Z. Government boosts spending, cuts budget surplus forecasts
Doubts over the phase-one deal between the United States (US) and China keep disturbing the kiwi traders. While the Wall Street Journal (WSJ) raised hopes of no fresh US tariffs on China after the December 15 deadline, the White House Adviser Larry Kudlow poured cold water on the optimism.
As a result, the US 10-year treasury yields take round to 1.84% while S&P 500 Futures slip near 0.10% to 3,134.
Amid a lack of fresh data from home, markets may now concentrate on the November month US Consumer Price Index (CPI) and the final 2019 meeting of the Federal Open Market Committee (FOMC). Ahead of the release, Westpac says, “US November CPI is expected to tick up to 2.0%yr, 2.3%yr ex-food & energy. But the FOMC meeting of course even with markets fully priced for a steady hand on the federal funds rate at 1.50-1.75%. The statement is likely to include only minor language changes and no dissenting votes. But there will be plenty to absorb in the quarterly Summary of Economic Projections, especially the “dot plot” of the likely path of interest rates. In September, the median dot for end-2020 was 1.88% and higher again in 2021 but with a wide range of dots. Risks are for these to be lowered, despite the FOMC’s broadly upbeat outlook.”
Also, trade headlines concerning the US-China phase-one will also be the key to predict intermediate market moves ahead of the key data/events.
Technical Analysis
While a monthly high near 0.6575/80 acts as immediate key resistance, sellers will look for entry below 200-day Simple Moving Average (SMA) near 0.6540 to take aim at November month high of 0.6466.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
