NZD/USD drops below 0.6600 ahead of key US data

• NZD/USD reversed its course after climbing to a fresh weekly high.
• US Dollar Index is staging a rebound after falling for two straight days.
• ADP Employment Change and Q2 GDP data will be released from the US.

The NZD/USD pair edged higher during the Asian session on Wednesday and touched its best level in a week at 0.6613. However, with the markets turning risk-averse, the greenback started to gather strength and forced the pair to reverse its direction. As of writing, NZD/USD was posting small daily losses at 0.6582.

Focus shifts to US data

Reflecting the dismal market mood, the S&P 500 futures are down 0.5% and major European equity indexes are losing between 0.2% and 0.7%. Meanwhile, the US Dollar Index is gaining 0.2% at 94.08.

Later in the day, the US Bureau of Economic Analysis will release the second quarter Gross Domestic Product data. Investors expect the economy to show a contraction of 31.7% on a yearly basis in Q2. Other data from the US will include ADP Employment Change for September, Pending Home Sales for August and the ISM Chicago’s Purchasing Managers’ Index.

Wall Street’s reaction to these data is likely to impact NZD/USD’s movements in the second half of the day. A sharp decline in US stocks could provide a boost to the USD and cause the pair to push lower. 

Technical levels to watch for