NZD/USD turns negative on the day near 0.7000 following earlier rally
- NZD/USD reversed its direction after rising sharply earlier in the day.
- US Dollar Index holds above 92.50 in the American session.
- Market sentiment turns sour with Wall Street's main indexes pushing lower.
The NZD/USD pair reached its highest level since mid-June at 0.7106 on Tuesday but erased all of its gains in the second half of the day. As of writing, the pair was down 0.2% at 0.7010.
Earlier in the day, the sharp upsurge witnessed in the AUD/USD pair and the upbeat data from New Zealand provided a boost to NZD/USD. The data from New Zealand revealed that the NZIER Business Confidence Index improved sharply to 7% in the second quarter from -13% in the first quarter. Furthermore, the Reserve Bank of Australia (RBA) decided to reduce the weekly asset purchases to A$4 billion from A$5 billion following its July meeting.
On a negative note, the bi-weekly GDT Price Index arrived at -3.6%, missing analysts' estimate of -0.3%.
DXY rallies above 92.50 on risk aversion
In the early American session, the Institute for Supply Management (ISM) reported that the Services PMI edged lower to 60.1 in June from 64 in May, falling short of the market expectation of 63.5. Underlying details of the publication showed that the Prices Paid Index declined to 79.5 from 80.6 and the Employment Index retreated to 49.3 from 55.3.
Although the initial market reaction to this report was largely muted, the negative shift witnessed in market sentiment helped USD outperform its rivals. With Wall Street's main indexes suffering losses, the US Dollar Index jumped above 92.50 and was last seen rising 0.35% on a daily basis. Meanwhile, the Dow Jones Industrial Average and the S&P 500 indexes are down 1.25% and 0.8%.
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.
