NZD/USD stays directionless near 0.6400 at the start of the week

• Services sector remains healthy in New Zealand in October.
• US Dollar Index stays in red below 98 mark.  
• Coming up: Producer Price Index (PPI) report from New Zealand.

The NZD/USD pair closed the previous week 70 pips higher as the NZD capitalized on the Reserve Bank of New Zealand’s decision to keep its policy rate unchanged despite the market expectation for a 25 basis points rate cut. With the lack of significant macroeconomic drivers allowing major currency pairs to go into a consolidation phase at the start of the week, the NZD/USD pair moves in a very tight range near the 0.64 handle.

The only data from New Zealand at the start of the week showed that the activity in the service sector continued to expand at a robust pace in October with the Business NZ Performance of Services Index (PSI) coming in at    55.4. In the early trading hours of the Asian session on Tuesday, the Producer Price Index (PPI) report will be looked upon for fresh impetus but is unlikely to trigger a sharp market reaction.

There won’t be any significant macroeconomic data releases from the United States on Monday and the pair is likely to extend its sideways grind.  

Eyes on US-China trade dispute

Meanwhile, investors will be paying close attention to fresh developments surrounding the US-China trade dispute. Chinese news agency Xinhua over the weekend reported that  Chinese Vice Premier Liu He held a phone conversation with US  Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Saturday morning and that the talks were constructive.

Technical levels to watch for