- NZD/USD looks to close second straight day in the negative territory.
- US Dollar Index holds above 90.00 after earlier dropd.
- Investors await key macroeconomic data releases from US on Thursday.
The NZD/USD pair edged lower on Tuesday and managed to stage a modest recovery in the first half of the day on Wednesday. Nevertheless, the renewed USD strength during the American session forced the pair to reverse its course. At the moment, NZD/USD is losing 0.3% on the day at 0.7175.
USD valuation continues to drive NZD/USD movements
Earlier in the day, the USD struggled to find demand as the benchmark 10-year US Treasury bond yield dropped to its lowest level in a month below 1.5%. The US Dollar Index (DXY) slumped to a daily low of 89.83 and allowed NZD/USD to stay in the positive territory.
In the absence of high-tier macroeconomic data releases, the US T-bond yields started to retrace the daily decline and the DXY erased its losses to turn flat above 90.10.
On Thursday, Electronic Card Retail Sales will be released from New Zealand. More importantly, the US Bureau of Labor Statistics will publish May Consumer Price Index (CPI), which is expected to show that inflation rose to 4.7% on a yearly basis from 4.2%. A higher-than-expected reading could provide a boost to US T-bond yields and help the USD outperform its rivals and vice versa. The US Department of Labor’s weekly Initial Jobless Claims data will be featured in the US economic docket as well.
Commenting on the US inflation outlook, “the current rise in prices is being driven by outliers that will soon dissipate, resulting in prices coming back to normal levels ahead,” said Jan Hatzius, Chief Economist at Goldman Sachs. “This suggests that Fed officials can stick with their plan to exit only very gradually from the easy current policy stance.”
Technical levels to watch for
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