NZD/USD registers modest gains around mid-0.65s ahead of FOMC
- New Zealand commits to increase spending on infrastructure.
- US Dollar Index extends sideways grind near 97.50.
- FOMC will release updated economic projections and policy statement later.
The NZD/USD pair gained traction during the Asian trading hours after the New Zealand government announced that it will be spending 12 billion NZD on infrastructure in the next fiscal year. Additionally, Statistics New Zealand reported credit card retail sales in November increased by 2.6% to beat the market expectation of 0.5% and provided an additional boost to the NZD.
However, the fact that the Half-Year Economic and Fiscal Update (HYEFU) showed that 2019 growth forecast for New Zealand was revised down to 2.4% from 3.2% made it difficult for the kiwi to preserve its strength. After climbing to a session high of 0.6556 in the Asian session, the pair retreated below 0.6530 but seems to have gone into a consolidation phase ahead of the day's key events. As of writing, the pair was up 0.05% on the day at 0.6545.
USD valuation is likely to drive pair's action
In the second half of the day, the inflation data from the US and the Federal Reserve's monetary policy announcements will be watched closely by the market participants.
Experts see the core Consumer Price Index in the US to stay unchanged at 2.3% on a yearly basis in November and don't expect the Fed to make any changes to its policy statement. In the meantime, the US Dollar Index is virtually unchanged on the day at 97.50.
With today's event out of the way, markets' focus will shift back to the US-China trade conflict. According to the latest headlines, the US is planning to delay the tariff hikes on Chinese imports that will go into effect on December 15th. Positive developments around the trade war could provide a boost to the antipodeans in the second half of the week.
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
