- A modest USD strength prompted some intraday selling around NZD/USD on Wednesday.
- A generally positive risk tone benefitted the perceived riskier kiwi and helped limit losses.
- Investors now look forward to the US economic docket for some short-term trading impetus.
The NZD/USD pair reversed a major part of its intraday losses and was last seen hovering near the top end of its daily trading range, around the 0.6760-65 region.
The pair struggled to capitalize on the previous day's recovery move from the 0.6700 mark or the YTD low instead, witnessed some selling during the early part of the trading on Wednesday amid a modest US dollar strength. That said, a generally positive tone helped limit deeper losses for the perceived riskier kiwi.
Having posted some losses over the past two trading sessions, the greenback attracted some buying on Wednesday and continued drawing support from the Fed's hawkish outlook. It is worth recalling that the so-called dot plot indicated that the Fed officials expect to raise the fed funds rate at least three times next year.
The USD bulls, however, refrained from placing aggressive bets amid a fresh leg down in the US Treasury bond yields. Apart from this, the optimism over the prospects that the current vaccines may be more effective than first thought in fighting the Omicron variant of the coronavirus acted as a tailwind for the NZD/USD pair.
The mixed fundamental backdrop warrants some caution before placing directional bets amid relatively thin liquidity conditions heading into the end-of-year holiday season. Market participants now look forward to the US economic docket, highlighting the release of the final Q3 GDP print and the Conference Board's Consumer Confidence Index.
This, along with the US bond yields, might influence the USD price dynamics and provide some impetus to the NZD/USD pair. Traders will further take cues from developments surrounding the coronavirus saga and the broader market risk sentiment to grab some short-term opportunities around the major.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.