- A combination of factors provides a modest intraday rise to the NZD / USD on Wednesday.
- A rally in US bond yields benefits the USD and limits any potential rise in the pair.
- Investors are now turning their attention to the US ISM Services PMI for short-term opportunities.
The pair NZD / USD has returned a significant portion of its initial earnings to weekly highs and now has fallen back below the round level of 0.7200.
The pair has built on the good bounce of the previous day of more than 60 pips from the 0.7135 region, and has gained some traction during the first half of Wednesday’s trading action. The prevailing optimism in the market has benefited the higher perceived risk NZD and provided a modest boost to the NZD / USD pair.
Global risk sentiment has remained supported by renewed optimism about massive fiscal stimulus in the United States. In the latest development, Democrats took the first step in promoting President Joe Biden’s proposed aid package and opened the debate on a 2021 fiscal budget resolution with spending instructions for the coronavirus.
The pair’s bulls were inspired plus on better-than-expected employment details from New Zealand, which showed the unemployment rate unexpectedly fell to 4.9% in the fourth quarter. The reading was well below estimates pointing to an increase to 5.6% from 5.3% previously and was accompanied by a 0.6% increase in the number of people employed.
However, the rally has lacked strong follow-up and It has once again stopped near the 0.7225 region amid a modest rebound in demand for the US dollar.. Expectations of increased government borrowing continue to drive US Treasury yields higher, which is seen as a key factor benefiting the US dollar.
Market participants are now waiting for the release of the US ISM Services PMI to get some momentum. This, together with the news about the US stimulus, will influence the dynamics of USD prices. Apart from this, the broader market risk sentiment could further contribute to generating some trading opportunities around the NZD / USD.
NZD / USD technical levels