NZD/USD rises towards mid-0.72s on greenback sell-off

The NZD/USD pair, which pushed above the 0.72 handle in the early NA session, gathered strength following the dismal macro data from the U.S. and refreshed its 6-day high at 0.7252. As of writing, the pair was trading at 0.7249, gaining 1.25% on the day.

Earlier in the day, despite some cautious comments from the RBA Governor Lowe, the AUD/USD pair pushed above the critical 0.80 handle amid some better-than-expected data from China, providing an additional boost to the positively correlates NZD/USD pair. Moreover, the GDT Price Index, after recording a 0.4% contraction in its previous release two weeks ago, came in at 0.3%, further supporting the upsurge.

On the other hand, as American traders returned from the long Labor Day weekend, the greenback came under a broad-based selling pressure in the NA session. In addition to Fed Governor Lael Brainard's dovish comments, disappointing macro data from the U.S. is weighing on the DXY. Factory Orders on a monthly basis in July contracted by 3.3% after increasing by 3.2% in June. In a speech at University Club in New York, Brainard argued that the monetary policy shouldn't be the first line of defense against financial imbalances and the low inflation was forcing the Fed to be cautious about the next rate hike.

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In the remainder of the session, Minneapolis Fed President Kashkari and Dallas Fed President Kaplan's speeches will be looked upon for fresh clues regarding the beginning of the balance sheet reduction and a possible rate hike before the end of the year.

Technical outlook

The pair could encounter the initial hurdle at 0.7330 (50-DMA) ahead of 0.7415 (Aug. 7 high) and 0.7500 (psychological level). On the downside, supports could be seen at 0.7240 (100-DMA), 0.7200 (psychological level) and 0.7150 (200-DMA).

• NZD/USD: Rebounds are likely to remain limited - Natixis