- RBNZ's Orr says policy easing bias remains in place.
- Upbeat sentiment helps NZD recover its losses.
- DXY struggles to rise above 97 for the second straight day.
The NZD/USD pair lost its traction during the Asian trading hours and dropped to its lowest level in five days at 0.6740 after the Reserve Bank of New Zealand Governor Adrian Orr said that the NZD's exchange rate was around a "happy space" and added that the monetary policy easing bias would remain in place for now. Following that drop, however, the pair gained traction in the second half of the day with the risk-sensitive kiwi taking advantage of the improving market sentiment. At the moment, the pair is trading at 0.6768, adding 0.1% on a daily basis.
Meanwhile, the bi-weekly GDT price auction yielded a 0.5% increase in the GDT price index and beat the market expectation of -0.5%.
Upbeat first-quarter earnings figures from the U.S. corporations and positive sentiment data from the euro area today allowed risk-on flows to dominate the market action. The 10-year U.S. T-bond yield gained more than 1% today to rise to its highest level since March 20 and major equity indexes in the United States opened in the positive territory to reflect the strong risk-appetite.
On the other hand, today's data from the U.S. revealed that industrial production contracted 0.1% on a monthly basis in March to fall short of the market expectation of +0.2% and weighed on the greenback to help the pair continue to push higher. At the moment, the DXY was virtually unchanged on a daily basis at 96.94.
In the early trading hours of the Asian session, inflation report from New Zealand, which is expected to show the CPI edging down to 1.7% in the first quarter from 1.9% in the last quarter of 2018, will be looked upon for fresh impetus. A soft inflation reading is likely to weigh on the NZD as it would allow the RBNZ to stay dovish in the near-term.
Technical levels to consider
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