NZD/USD advances to session tops near 0.6870 after GDT price index rises more than expected

• US Dollar Index pulls away from daily lows.
• Risk-on mood helps kiwi stay strong.
• New Zealand’s GDT price index rises by 1.9%.

After spending the European session moving sideways near the 0.6850 area, the NZD/USD gained traction in the early NA trading hours and touched its highest level of the day at 0.6872. As of writing, the pair is trading at 0.6867, adding 0.25% on a daily basis.

Earlier in the day, the Westpac Consumer Survey revealed that the consumer confidence deteriorated in New Zealand with the headline index falling to 103.8 in Q1 from 109.1. However, the upbeat market sentiment, as reflected by the strong gains seen in the major European stocks and Wall Street’s positive start to the day, on Tuesday helped the kiwi gather strength and outperform the greenback.  

Additionally, the latest bi-weekly GDT auction yielded a 1.9% increase in the GDT price index to beat the market expectation of 0.1% and provided additional support to the NZD.

On the other hand, the greenback continues to have a difficult time attracting investors ahead of tomorrow’s FOMC announcements, the US Dollar Index is posting daily losses for the seventh time in the last eight trading days. The only data from the U.S. today showed that factory orders increased by 0.1% in January to match December’s reading but fell short of the analysts’ estimate of 0.3%.

“Revisions to Fed’s econ projections are likely to be relatively small but we expect median forecast for policy rate path (‘the dot plots’) to shift from indicating two rate hikes in 2019 to unchanged rates,”  SEB Bank analysts said in a recently published report.

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