- NZD/USD extends pullback from 0.6585, the highest since January 27.
- US Fed struck a dovish tone, also trimmed forecasts/projections, while keeping the benchmark rate unchanged.
- New Zealand’s Electronic Card Retail Sales recovered heavily but US-China tussle seems to add downside pressure on the quote.
- A lack of major data/events will keep qualitative catalysts on the driver’s seat.
NZD/USD drops to 0.6532, intraday low of 0.6525, during the initial Asian session on Thursday. As a result, the pair trims the majority of the gains marked post-US Federal Reserve’s monetary policy meeting. The quote also seems to ignore recently published second-tier data from New Zealand while keeping eyes on the Sino-American tension.
New Zealand’s Electronic Card Retail Sales recovered from -47.5% YoY print to -6% in May. The monthly figures flash a sharp U-turn to +78.9% versus the downwardly revised -47.5% prior.
The US Federal Open Market Committee (FOMC) kept the Fed rate unchanged while signaling no rate alterations until 2022. The US central bank also revised down the growth inflation forecasts by citing the coronavirus (COVID-19) fears. Chairman Jerome Powell also sounds dovish while showing readiness to use the much-anticipated Yield Curve Control (YCC) measures in the future if needed.
Following the event, the US dollar marked notable weakness across the board and the kiwi pair wasn’t an exception. Though, the Global Times’ criticism of the Fed’s policies, after US President Donald Trump praised them, marked the return of risk aversion and weighed on the quote. Also suggesting the tension between the world’s top two economies could be comments from US Vice President Mike Pence who said, “We will continue to stand strong against China on trade.” It should also be noted that China was said, by the BNN, to keep buying American Soybeans despite tougher talk. While portraying the present market mood, the S&P 500 Futures drop near 0.40% to 3,173.
The pair traders may now keep eyes on the US-China story amid a lack of major catalysts on the calendar.
Technical analysis
Unless declining below March month high of 0.6450, the NZD/USD pair bears are less likely to enter any fresh positions. On the contrary, buyers are also likely to remain cautious unless the quote crosses 0.6600 round-figures.
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