NZD/USD edges higher to 0.6300 area ahead of key US data
- US Dollar Index rebounds modestly after testing 97 on Tuesday.
- 10-year US Treasury bond yield continues to push lower.
- Coming up: ADP Employment Change and ISM Non-Manufacturing PMI from US.
The NZD/USD pair erased a portion of Tuesday's decisive gains during the Asian trading hours but didn't have a difficult time regaining traction. As of writing, the pair was trading at 0.6298, adding 0.4% on a daily basis.
Although the Federal Reserve's surprising 50 basis points rate cut on Tuesday triggered a USD selloff, sharp fall witnessed in the US Treasury bond yields and stocks US pointed out to a risk-off environment and kept the NZD's gains in check. With European equity indexes and the US stock futures climbing higher on Wednesday, the pair took advantage of the upbeat market and, once again, turned north.
Nevertheless, the 10-year US T-bond yield remains dangerously close to all-time lows that it set on Tuesday at 0.916% and erases 5% on the day, suggesting that the flight-to-safety could restart dominating markets in the near-term.
Focus shifts to US data
In the second half of the day, the ADP Employment Change and the ISM Non-Manufacturing PMI data will be looked upon for fresh impetus. Some experts think that the Fed could opt out for another 25 basis points rate cut at its March meeting and disappointing readings could ramp up this probability and weigh on the greenback.
At the moment, the US Dollar Index is up 0.25% on the day at 97.38, limiting the pair's upside for the time being.
Technical levels to watch for