NZD/USD clings to modest daily gains above 0.6400 ahead of US data
- USD weakens against its rivals following this week's FOMC meeting.
- Mixed business sentiment data from NZ limits NZD's gains.
- Coming up: Core PCE Price Index data from the US.
The broad-based selling pressure surrounding the USD in the second half of the day on Wednesday allowed the NZD/USD pair to gain traction. During the European trading hours, the pair reached a fresh weekly high of 0.6433 but struggled to preserve its momentum and returned to 0.6400 area, where it was still up 0.2% on a daily basis.
USD stays under pressure on Thursday
The Federal Reserve on Wednesday announced that it lowered the policy rate by 25 basis points. Although this move was largely expected and priced in the markets, FOMC Chairman Powell's comments made it difficult for the Greenback to find demand.
Assessing Powell's remarks, "In the press conference, Chair Powell referred to the risks in the outlook as having ‘perhaps moved in a more positive direction’. When pressed on this, he referred to progress towards a possible trade deal with China," said ABN AMRO analysts. "We think some kind of truce that freezes existing tariffs is possible, but even this modest step looks far from certain. Indeed, just today, the November APEC summit in Chile – where a deal might have been sealed – was cancelled, suggesting the US and China are still some distance from even an interim deal.”
Meanwhile, ANZ's Business Confidence Index in New Zealand improved to -42.4 in October from -53.5 but ANZ's Activity Outlook Index fell to -3.5% from -1.8% to keep the NZD's gains limited.
In the American session on Thursday, the core Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred gauge of inflation, will be looked upon for fresh impetus.
Technical levels to watch for