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  • RBNZ’s surprise decision to leave the policy rate unchanged boosted kiwi.
  • Resurfacing US-China trade worries make it difficult for the pair to extend rally.
  • US Dollar Index continues to fluctuate in tight range below 98.50.

The NZD/USD pair registered a daily gain  of around 80 pips on Wednesday boosted by the Reserve Bank of New Zealand’s (RBNZ) surprise decision to keep its policy rate unchanged at 1% but struggled to preserve its bullish momentum. As of writing, the pair was trading at 0.6392, down 0.28% on a daily basis.

Commenting on the RBNZ’s policy decision,  “Rates were kept on hold because economic developments since the August statement did not warrant a change,” TD Securities analysts said.  “The Bank indicated it is prepared to ease monetary policy further noting near term risks were tilted to the downside.”

Focus shifts to US-China trade headlines after RBNZ

Resurfacing worries over a protracted trade dispute between the United States (US) and China amid reports suggesting that China was refusing to commit to the amount of agricultural imports agreed  weighed on antipodeans. Additionally, the data from China revealed business investment fell to 5.2% on a yearly basis while industrial output disappointed with an expansion of 4.7% to further hurt the kiwi.

In the second half of the day, markets will be paying close attention to Federal Open Market Committee (FOMC) Chairman Jerome Powell’s remarks in the second day of his testimony before the US Congress. Ahead of this event, the US Dollar Index posts modest daily gains near 98.40.

In the early trading hours of the Asian session, the Business NZ Purchasing Managers’ Index (PMI) data from New Zealand will be looked upon for fresh catalysts.

Technical levels to consider