- RBNZ’s decision to maintain status-quo provided some intraday boost on Wednesday.
- Recovering US bond yields underpinned the USD demand and capped further gains.
- Deteriorating risk sentiment might exert some pressure amid thin US economic docket.
Having failed to capitalize on the post-RBNZ spike to one-week tops, the NZD/USD pair now seems to have stabilized and was seen consolidating in a range near the 0.6320 region.
The pair added to its recent recovery gains from multi-year lows and got a strong boost during the early Asian session on Wednesday after the Reserve Bank of New Zealand (RBNZ) kept the overnight cash rate unchanged at 1.00%. However, the accompanying policy statement said that there is scope for additional monetary stimulus to boost economic growth and maintain inflation/employment objectives, which eventually kept a lid on any strong follow-through.
Post-RBNZ uptick quickly runs out the steam
This coupled with a goodish pickup in the US Dollar demand, supported by recovering US Treasury bond yields on the back of encouraging trade-related developments, further collaborated towards capping the pair, at least for the time being. It is worth mentioning that China is reportedly planning to buy more US farm products as a goodwill gesture to the recent move by the US to exempt $250 billion Chinese goods from a 25% tariff and ahead of the high-level trade talks in October.
Meanwhile, a slight deterioration in the global risk sentiment, as depicted by a bearish trading sentiment around equity markets, further benefitted the greenback’s perceived safe-haven status against its New-Zealand counterpart and might continue to exert some downward pressure on the major.
In absence of any major market-moving economic releases from the US, traders on Wednesday are likely to take cues from scheduled speeches by influential FOMC members – Chicago Fed President Charles Evans and Kansas City Fed President Esther George – in order to grab some short-term opportunities.
Technical levels to watch
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