NZD/USD clings to modest daily gains near 0.7030 ahead of US data
- NZD/USD failed to break above 0.7050 on Tuesday.
- US Dollar Index remains depressed below 92.00 ahead of US data.
- Risk flows continue to dominate the financial markets.
The NZD/USD pair met resistance near 0.7050 for the second straight day on Tuesday and erased a large portion of its daily gains. As of writing, NZD/USD was trading at 0.7030, up 0.17% on a daily basis.
Eyes on US data, Powell's testimony
On Tuesday, the data from China showed that the Caixin Manufacturing PMI in November improved to 54.9 from 53.6 and beat the market expectation of 53.5. This upbeat reading provided a small boost to the China-proxy NZD. Additionally, the upbeat market mood, as reflected by rising global equity indexes, is helping the kiwi stay resilient against safe-haven currencies.
On the other hand, the US Dollar Index is having a difficult time staging a meaningful recovery on Tuesday as risk flows continue to dominate the financial markets. At the moment, the S&P 500 Futures are up 1.1% on the day and the DXY is losing 0.06% at 91.81.
In the second half of the day, the IHS Markit and the ISM will both release the Manufacturing PMI reports for November. More importantly, FOMC Chairman Jerome Powell will be testifying before Congress. In his prepared remarks, Powell will reiterate that the economic outlook depends on the virus and the pace of recovery has moderated recently. Investors will be keeping a close eye on the Q&A session.
Technical levels to watch for