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3 Jan 2024

NZD/USD trims losses following FOMC minutes, defends the 20-day SMA

  • The NZD/USD currently recovered near the 0.6245 level, trimming practically all of its daily losses.
  • ISM December Manufacturing PMIs came in better than expected.
  • FOMC minutes from the December meeting revealed a hawkish tilt, indicating prolonged higher rates.

The New Zealand Dollar (NZD) encountered a downtrend in Wednesday's trading, forfeiting gains against a strong US Dollar (USD), with the NZD/USD landing near 0.6225 but then recovering towards 0.6245, above the 20-day Simple Moving Average (SMA). The pair's slight slipping is primarily attributable to the strength of the USD and the influence of the Federal Open Market Committee (FOMC) minutes from the December meeting, which sounded hawkish. Strong ISM data from the US outshined weak JOLTs Job Opening figures from November.

The U.S. Bureau of Labor Statistics indicated a slight decrease in JOLT job Openings in November, falling short of the consensus estimate of 8.85M to 8.79M, despite it being marginally higher than the previous figure of 8.852M. On the positive side, the US Institute for Supply Management (ISM) Manufacturing PMI for December came in at 47.4, higher than 47.1, while the Employment index for the same month posted a figure of 48.1, exceeding the anticipated 46.1, which shows resilience in the Manufacturing sector.

In addition, the FOMC December minutes showed that policymakers acknowledged that monetary policy may be at or nearing its peak but that they consider it prudent to hold current rates for a longer period. Meanwhile, according to the CME FedWatch Tool, dovish bets on the Fed eased somewhat, but the odds of cuts in March and May are still high, above 50%. A hold in January is priced in.

 

NZD/USD levels to watch

The daily chart suggests the pair harbors a neutral to bearish outlook. Despite being in positive territory, the negative slope of the Relative Strength Index (RSI) can be construed as a sign of dwindling buying momentum, giving rise to a potential retreat. This is supported further by the rising red bars of the Moving Average Convergence Divergence (MACD), which generally reflects a stronger inclination towards the sellers' side.

However, examining the larger context reveals a rather bullish undertone. The pair continues to stand above the 20,100,200-day Simple Moving Averages (SMAs), indicating that the overarching control seems to be with the buyers. Despite the near-term bearish signals, the medium-to-long-term perspective shed by the position of the Simple Moving Averages (SMAs) leans more toward the optimistic end.


NZD/USD daily chart

 

Jan 3, 2024

GBP/JPY pinned to the high side as Yen market flows reverse direction

The GBP/JPY has climbed over 1.3% on Wednesday as the Pound Sterling (GBP) recovered recently lost ground against the Japanese Yen (JPY), rising from a two-week low near 178.75 to come within challenge range of the 182.00 handle.
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Jan 3, 2024

Gold Price Forecast: XAU/USD retreat post-Fed minutes as Greenback hits new high

Gold price slid during the last hour on Wednesday after the US Federal Reserve (Fed) released December’s meeting minutes, which didn’t deliver any dovish hints.
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