- US Dollar Index stages modest recovery on Thursday.
- FOMC Chairman Powell shuts the door for a rate hike in near-term.
- Coming up: PPI data from US and Business PMI data from New Zealand.
The NZD/USD pair capitalized on the broad-based USD weakness in the second half of the day on Wednesday and rose to its highest level since late July at 0.6604. Although the pair struggles to push higher on Thursday, it continues to post small daily gains near 0.6590.
FOMC: No rate hikes in sight
As expected, the Federal Open Market Committee kept its policy rate unchanged within the 1.5% – 1.75% at its December policy meeting. However, Chairman Jerome Powell said that he would have to see a significant and persistent increase in inflation to consider a rate hike and triggered a USD selloff. The US Dollar Index, which tracks the greenback’s performance against a basket of six major currencies, slumped to its lowest level in more than three months at 97.04 before staging a technical rebound.
Ahead of the mid-tier Producer Price Index (PPI) and weekly Jobless Claims data from the US, the index is up 0.08% on the day at 97.15.
More importantly, investors will be keeping a close eye on fresh developments surrounding the US-China trade talks. In case sides fail to reach a deal and the US ends up hiking tariffs on Chinese imports on Sunday, the trade-sensitive kiwi could start erasing this week’s gains.
In the meantime, the Business NZ PMI data, which is expected to fall to 49.8 in November from 52.6 in October, from New Zealand will be looked upon for fresh impetus during the Asian trading hours on Friday.
Technical levels to watch for
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