- NZD/USD has rebounded firmly from 0.6200 as investors’ risk appetite has improved.
- Investors are playing with the ‘value-buying’ concept and channelizing funds into some risk-sensitive assets.
- A surprise rise in the US New Orders Index will clear that the overall forward demand is in an expansionary mode.
The NZD/USD pair has sensed a buying interest near the round-level support of 0.6200 in the early Asian session. The Kiwi asset is looking to stretch its recovery above the immediate resistance of 0.6230 as the US Dollar Index (DXY) has witnessed a loss in the upside momentum. The upside in the Kiwi asset looks favored as the risk appetite of the market participants is improving.
Investors are ignoring the fact that the Federal Reserve (Fed) has no other option than to stretch interest rates further to bring down the persistent inflation. Therefore, the market participants are playing with the ‘value-buying’ concept and channelizing funds into some risk-sensitive assets. S&P500 futures have some a significant recovery in Thursday’s session, portraying a risk-on mood.
The USD Index has corrected marginally after failing to hit the critical resistance of 105.20. Also, it is struggling to sustain itself above the round-level support of 105.00. Meanwhile, the demand for US government bonds remained vulnerable on Thursday as investors see interest rates above 5% by the Fed sooner. This fueled the 10-year US Treasury yields to 4.06%.
After the release of the mixed United States ISM Manufacturing PMI, which showed that the production sector is constantly contracting but assured a stellar forward demand, investors are shifting their focus towards the US ISM Services PMI (Feb).
The economic data is seen lower at 54.5 from the former release of 55.2. The New Orders Index, which conveys the forward demand is expected to decline to 58.5 from the prior figure of 60.4. A surprise rise in the New Orders Index will clear that the overall forward demand is in an expansionary mode and could propel the Consumer Price Index (CPI) ahead.
Meanwhile, the New Zealand Dollar will display an action move over the release of the Caixin Services PMI (Feb) data. The economic data is likely to drop to 50.5 vs. the prior figure of 52.9. It is worth noting that New Zealand is one of the leading trading partners of China and a decline in the Services PMI might impact the New Zealand Dollar ahead.
This article was originally published by Fxstreet.com.Read the original article here.
