- The NZD / USD is declining during the European session on Wednesday.
- The US Dollar Index remains relatively quiet above 92.20.
- The 10-year US Treasury yield is posting small gains ahead of the FOMC Minutes.
The pair NZD / USD it declined on Tuesday but managed to rebound during US trading hours before closing virtually unchanged at 0.7057. With investors becoming cautious on Wednesday, the pair lost traction and was last seen shedding 0.27% on the day at 0.7040.
During the Asian session, data from New Zealand showed that the ANZ commodity price index rose 6.1% in March. This reading exceeded the market expectation of 2.7% by a wide margin, but was largely ignored by market participants.
Currently, the Euro Stoxx 50 Index is down 0.3% on the day and S&P 500 futures are flat at 4,063, confirming the view that risk flows are struggling to dominate financial markets. Meanwhile, the benchmark 10-year US Treasury yield rose 0.65% the day after losing more than 3% on Tuesday, helping the dollar show resistance. At the moment, the US dollar index is down 0.04% to 92.26.
Later in the session, the FOMC will release the minutes of its March 16-17 meeting and US President Joe Biden will present an update on its spending plans.
NZD / USD short-term outlook
Analysts at Credit Suisse believe that the NZD / USD will continue to fluctuate in a neutral range between 0.6870 – 07200 in the near term.
“New Zealand’s launch of the vaccine lags behind the rest of the developed world; investors may now reassess the validity of New Zealand’s successful micro-lock strategy,” the analysts noted. “Given how responsive the currency has been to changes in expectations around non-traditional monetary policy, we believe the Bank of New Zealand may prefer to tiptoe over the possibility of tightening to avoid an unwanted rally in the NZD. “.