NZD/USD rebounds sharply above 0.6240 as USD Index turns subdued
- NZD/USD has witnessed buying interest above 0.6220 amid a subdued performance by the USD Index.
- S&P500 futures have added significant gains in Asia, portraying a recovery in the risk appetite.
- Republican delegates denied approving the default as it would widen the already vulnerable budget deficit.
The NZD/USD pair has displayed a solid recovery after building a base above 0.6220 in the Tokyo session. The Kiwi asset has gained some traction as the US Dollar Index (DXY) has delivered a subdued performance in Asia.
S&P500 futures have added significant gains in Asia after a bearish Tuesday, portraying a recovery in the risk appetite of the market participants. The USD Index is facing barricades in stretching its recovery above 102.70.
The USD Index has failed to find traction despite the further postponement of the US borrowing cap raise approval by House of Representatives Joseph McCarthy. Republican delegates denied approving the default as it would widen the already vulnerable budget deficit. Meanwhile, US President Joe Biden cited that he will be in regular touch with Speaker McCarthy for US debt-ceiling issues.
However, each day spent without raising of US debt-ceiling is pushing the United States economy swiftly toward recession. The US Treasury has already conveyed that it will be out of funds by June 01 and might default in addressing obligated payments.
About interest rate guidance, Atlanta Federal Reserve (Fed) President Raphael Bostic said “It is unclear what the Fed would do in the case of a debt default”. He further added that a stick US inflation and rising unemployment will put immense pressure on the Fed.
On the New Zealand Dollar front, investors are awaiting the release of the Trade Balance data, which will release on Friday.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
