- The NZD / USD moves cautiously during the early hours of Asian trading.
- The US dollar recovers from initial losses and remains above 91.80.
- Kiwi enjoys support from better risk appetite, RBNZ may stop buying QE bonds.
The NZD / USD stalled Tuesday at the start of the Asian trading session. The pair are recovering some of their losses from the day before.
As of this writing, the NZD / USD pair is trading at 0.7248, up 0.16% for the day.
The rebound in the US Dollar Index (DXY) from the lower levels keeps gains limited for the NZD / USD.
US Treasury yields are trading below 1.5% as investors continue to digest sharp increases in the Personal Consumption Index (PCE), the Fed’s main indicator of inflation. The PCE jumped 3.4% in May from the previous year.
On the flip side, Kiwi won as risk sentiment improved after a breakthrough in infrastructure talks in Washington the week before.
Meanwhile, according to Michael Gordon, chief economist at Westpac, New ealnd’s housing market will cool significantly over the coming month over the next 12 months due to a change in tax structures.
On top of that, the Bank of New Zealand has said that New Zealand’s central bank may end its quantitative easing program in the coming months as it prepares to raise interest rates. This, in turn, provides inferior ground to the kiwi.
It should be noted that S&P 500 futures were trading at 4,281 with gains of 0.23%.
For now, momentum around the US dollar continues to influence the performance of the pair in the absence of any major fundamental catalyst.