- NZD/USD is fluctuating in a narrow band on Tuesday.
- Risk rally seems to have lost its momentum.
- US Dollar Index stays in red ahead of US data.
The upbeat macroeconomic data releases from China and the risk-on market environment helped the NZD outperform its rivals at the start of the week. The NZD/USD pair touched its highest level since March 2019 at 0.6920 on Monday but struggled to preserve its bullish momentum. As of writing, the pair was down 0.12% on a daily basis at 0.6895.
Renewed coronavirus vaccine optimism after Moderna announced that its candidate was 94.5% effective triggered a risk rally on Monday and global equity indexes registered strong gains.
However, the surging number of coronavirus cases in Europe suggests that there could be additional lockdown measures before a vaccine becomes widely available. At the moment, the S&P 500 Futures are down 0.4% on the day, pointing out to a negative shift in risk sentiment.
Eyes on US data
Meanwhile, the US Dollar Index (DXY) is posting losses for the fourth straight day on Thursday, helping NZD/USD limit its losses. At the moment, the DXY is down 0.25% at 92.42.
Later in the session, Retail Sales, Industrial Production and Business Inventories data will be featured in the US economic docket. Investors expect Retail Sales to increase by 0.5% in October and a weaker-than-expected reading could cause safe-haven flows to weigh on NZD/USD in the second half of the day. Additionally, the bi-weekly Global Dairy Trade auction in New Zealand is scheduled to take place during the American trading hours on Tuesday.
Technical levels to watch for
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