- NZD/USD witnessed heavy promoting for the third successive day on Tuesday.
- Weaker NZ Retail Gross sales information exerted strain amid sustained USD shopping for.
- Acceptance under the 0.7000 mark additional aggravated the bearish strain.
The NZD/USD pair remained depressed heading into the European session, albeit has managed to rebound a number of pips from the bottom degree since October 13. The pair was final seen buying and selling with solely modest intraday losses, slightly below mid-0.6900s.
The pair struggled to capitalize on its intraday constructive transfer, as an alternative met with a contemporary provide close to the 0.6975 area and turned decrease for the third successive day on Tuesday. The stoop in New Zealand Retail Gross sales, by 8.1% within the September quarter, was not as extreme as economists had anticipated, although was sufficient to weigh on the home foreign money. This, together with a robust bullish sentiment surrounding the US greenback, exerted heavy downward strain on the NZD/USD pair.
In actual fact, the important thing USD Index shot to the very best degree since July 2020 through the early a part of the buying and selling motion and remained effectively supported by speculations for an early coverage tightening by the Fed. US President nominated Jerome Powell to function the Fed chairman for a second time period. The truth that traders thought of the opposite main candidate, Lael Brainard, to be the extra dovish of the 2, the announcement bolstered bets for greater US rates of interest.
The Fed funds futures point out the chance for an eventual Fed price hike transfer by July 2022 and a excessive probability of one other increase by November. This, in flip, triggered a pointy in a single day rally within the US Treasury bond yields, which continued performing as a tailwind for the buck. Aside from this, issues over the rising variety of COVID-19 circumstances in Europe and the reimposition of restrictive measures additional benefitted the dollar’s safe-haven standing.
Aside from this, technical promoting on a sustained break and acceptance under the 0.7000 psychological mark additional contributed to the NZD/USD pair’s ongoing decline. Furthermore, the markets already appear to have absolutely priced in one other price hike by the Reserve Financial institution of New Zealand (RBNZ) on the upcoming assembly on Wednesday. This, in flip, favours bearish merchants and helps prospects for an extension of the downward trajectory.
Heading into Wednesday’s key central financial institution occasion danger, merchants may take cues from the discharge of the flash US PMI prints for November later through the early North American session. The info, together with the US bond yields and the broader market danger sentiment, will affect the USD value dynamics and supply some impetus to the NZD/USD pair.
Technical ranges to look at