NZD/USD rebounds from 0.6000, downside remains favored on soaring hawkish Fed bets
- NZD/USD is expected to display more weakness after the conclusion of the short-lived pullback.
- Solid US ISM Services PMI data backed the DXY for printing a fresh two-decade high at 110.65.
- A hawkish stance on interest rates is expected by Fed Powell in his speech on Thursday.
The NZD/USD pair is displaying a less-confident pullback after hitting the psychological support of 0.6000 in the Asian session. The asset has remained in the grip of bears and is likely to display more weakness amid a broader strength in the US dollar index (DXY). In today’s session, the major witnessed a vertical fall after surrendering the crucial support of 0.6035.
The DXY has printed a fresh two-decade high at 110.65 as the release of an upbeat US ISM Services PMI infused adrenaline rush into the bulls. The Non-Manufacturing ISM data landed at 56.9, higher than the estimates and the prior release of 55.1 and 56.7 respectively.
This week, the speech from Federal Reserve (Fed) chair Jerome Powell will remain in the limelight. Fed Powell is expected to provide clues about the likely monetary policy action this month. It is highly likely that a ‘hawkish’ stance will be adopted on interest rates as solid US fundamentals have provided more room to the Fed for hiking interest rates unhesitatingly. Decent employment generation, stable manufacturing activities, and solid Services PMI have delighted Fed policymakers to sound hawkish without any hesitation.
On the NZ front, downbeat China’s trade balance data has weakened the kiwi bulls. Chinese imports have landed extremely lower at 0.3% against the expectations and the former release of 1.1% and 2.3% respectively. Also, the export data have been trimmed to 7.1% vs. estimates of 12.8%. China’s Trade Balance has slipped sharply to $79.39B against the expectations of $92.7B. It is worth noting that New Zealand is a leading trading partner of China and weaker Chinese imports are capable to weaken the antipodean.