NZDUSD drops amid fears of downbeat New Zealand GDP, US Dollar rebound

Traders witness mixed feelings during early Wednesday but the US Dollar defends the previous day’s recovery, despite initially refreshing the one-month low. That said, US inflation data renewed expectations of a 0.25% Fed rate hike and favored US Treasury yields to recovery. However, receding fears from the US banks’ fallouts and cautious optimism in the market capped the bond yields, which in turn challenged the US Dollar bulls.

USDJPY rises the most among the G10 currency pairs after dovish BoJ Minutes while NZDUSD followed the Yen pair on fears of a credit rating cut from S&P as New Zealand Q4 GDP looms. On the other hand, USDCAD remains mostly unchanged as an increase in Oil prices favors the Canadian Dollar.

Elsewhere, Gold price drops for the second consecutive day while Brent Oil rebounds from a three-month low to snap a two-day losing streak.

That said, the key Cryptocurrencies, however, defend the five-day winning streak even as Binance suspends Britain’s deposits and withdrawals.

Following are the latest moves of the key assets:

• Brent oil recovers from three-month low to $78.40, up 1.0% intraday at the latest.
• Gold drops for the second consecutive day, down 0.60% intraday near $1,892 as we write.
• USD Index prints mild gains near one-month low, up for the second day in a row.
• Wall Street closed in the green and so did equities in the Asia-Pacific region but shares in Europe and the UK trade mixed of late.
• BTCUSD and ETHUSD print five-day uptrend around $25,000 and $1,710 as we write.

US Dollar grinds higher amid sluggish markets

Although receding fears from the Silicon Valley Bank (SVB) and Signature Bank joined upbeat China activity data to keep markets rosy, backed by upbeat Wall Street closing, the recent run-up in yields and return of the Fed hawks allowed the US Dollar to remain firmer. It’s worth noting that the US inflation numbers remained easy but were well within the expected range and kept the hawkish bias intact, after initial fears of the Fed’s policy pivot due to the SVB fallout.

With this, the widening of New Zealand’s Current Account Deficit joined the US Dollar rebound to weigh on the NZDUSD ahead of NZ Q4 GDP. USDJPY also cheered the greenback’s run-up, as well as the absence of hawkish BoJ rhetoric, but the USDCAD remained depressed as the risk-on mood and hopes of fewer supplies, as well as firmer energy demand propelled Oil prices.

Additionally, Gold price extends the previous day’s pullback from a one-month high whereas equities in the Asia-Pacific zone remain firmer.

Elsewhere, BTCUSD and ETHUSD remain firmer for the fifth consecutive day, rose to the highest levels since June and August of 2022 the previous day, amid hopes of fewer regulations even as Binance’s move in the UK challenged crypto optimists.

• Strong buy: USDJPY
• Strong sell: ETHUSD, GBPUSD
• Buy: USD Index, USDCAD, Nasdaq, EURUSD
• Sell: DAX, FTSE 100, gold, BTCUSD, AUDUSD

Second-tier US data eyed

Having witnessed a mildly positive sign from the US inflation the previous day, market players will keep their eyes on the US Retail Sales, PPI and manufacturing data for further details of price pressure and confirm the recently hawkish Fed bias. Also important will be the UK budget and Japan’s wage talks, as well as chatters surrounding the global banking industry’s health.

May the trading luck be with you!