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MTrading Team • 2023-05-23

NZDUSD bulls step back ahead of RBNZ

NZDUSD bulls step back ahead of RBNZ

Risk appetite turns dicey during early Tuesday, mainly driven by expectations that the US policymakers will be able to avoid debt payment default. However, hawkish bets on the Federal Reserve (Fed) allow the US Dollar to remain firmer, which in turn exerts downside pressure on the major currencies, commodities and Antipodeans.

NZDUSD drops the most against the greenback as markets brace for the RBNZ’s rate hike amid downbeat hopes surrounding China, as well as the geopolitical tension relating to the Sino-American and the Russia-Ukraine tussles.

Elsewhere, gold price dropped towards the monthly low marked in the last week while the Oil price also reverse the week-start rebound. It should be noted that the yields remain sluggish and prod the USDJPY bulls while mixed Aussie PMIs join the firmer US Dollar to weigh on the AUDUSD.

Even so, equities in the Asia-Pacific zone and the US stock future edge higher while cryptocurrencies remain firmer despite lower trading volumes for Bitcoin and Altcoins.

Following are the latest moves of the key assets:

  • Brent oil fades bounce off one-week low, drops to $75.90 by the press time.
  • Gold price approaches the two-month low marked in the last week, down 0.70% intraday near $1,957 at the latest.
  • USD Index grinds higher around 103.40, up for the second consecutive day with mild gains at the latest.
  • Wall Street closed mixed and so did the Asia-Pacific shares. However, equities in Europe and the UK remain mildly offered as we write.
  • BTCUSD and ETHUSD ink minor gains around $27,300 and $1,850 as we write.
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US policymakers keep markets optimistic

Despite failing to strike the debt ceiling deal in the second attempt, US President Joe Biden and House Speaker Kevin McCarthy remain hopeful of getting the US debt ceiling deal through the House to avoid the ‘catastrophic’ default.

On the other hand, global ire about the Chinese ties with Russia and doubts over the dragon nation’s economic transition to lead the global moves, as predicted by the IMF, prod the risk-on mood. The same exerts additional downside pressure on the Antipodeans, other than the US Dollar strength.

That said, the US Dollar remains on the front foot and prods the monthly high amid hawkish comments from the Fed policymakers.

Cryptocurrencies seem to ignore the firmer greenback amid lesser volume, likely bracing for the US debt ceiling deal passage.

  • Strong buy: Gold
  • Strong sell: ETHUSD, GBPUSD
  • Buy: USD Index, USDCAD, Nasdaq, EURUSD

PMIs are in the spotlight

After a softer start of the week, markets are likely to witness a volatile day as multiple PMIs are on the calendar for release. Among them, the Aussie activity data for May has already marked mixed prints and weighed on the AUDUSD. The next PMIs are from the UK and Eurozone before the US PMIs. Should the activity numbers remain firmer, the USD may have an upside to track.

May the trading luck be with you!