- NZD/USD goes into consolidation following last week’s impressive rally.
- China’s trade surplus widened more than expected in May.
- US Dollar Index is moving in a tight range near 97.00.
The NZD/USD pair staged one of its best weekly performances last week and gained more than 300 pips. With the markets turning subdued on Monday, the pair has gone into a consolidation phase and was last seen trading rising 0.22% on the day at 0.6520.
The data published on Sunday revealed that China’s trade surplus widened to $62.93 billion in May to beat the market expectation of $39 billion by a wide margin. Underlying details of the trade report showed that China’s imports decline by 16.7% on a yearly basis in May. Nevertheless, China-proxy kiwi took advantage of this data and rose modestly against its rivals during the Asian session.
USD waits for FOMC’s policy announcements
Meanwhile, the US Dollar Index, which posted daily gains on Friday on the back of upbeat Nonfarm Payrolls (NFP) figures, is staying relatively quiet near 97.00 on Monday.
There won’t be any significant macroeconomic data releases from the US in the remainder of the day and the pair is likely to extend its sideways grind. On Wednesday, the FOMC will publish its monetary policy statement and investors will be keeping a close eye on potential changes to forward guidance following the jobs report.
Assessing the potential impact of the NFP data on the Fed’s policy, “the surprisingly strong jobs report comes ahead of the Federal Reserve’s decision next week,” said FXStreet analyst Yohay Elam. “The Fed strives to achieve full employment and this labor report is going in the right direction. Therefore, it removes the need for the Fed to act. Without further money printing, the dollar may gain ground.”
Technical levels to watch for
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