The NZD/USD pair has rebounded firmly after picking bids around 0.5600 in the Tokyo session. Last week, the asset declined after failing to cross the critical hurdle of 0.5750. The kiwi bulls witnessed an intense sell-off despite a decline in the monthly Consumer Price Index (CPI) data. The monthly inflation data declined to 6.8% from the prior release of 7%.
Also, the downbeat Caixin Manufacturing PMI data kept the antipodean on tenterhooks. The economic data has landed at 48.1, lower than the expectations and the prior release of 49.5. It is worth noting that New Zealand is a leading trading partner of China and a weaker-than-projected Caixin Manufacturing PMI data significantly impacts NZ exports.
This week, investors will focus on the interest rate decision by the Reserve Bank of New Zealand (RBNZ). Reuters poll on RBNZ rate hike forecast claims a fifth consecutive rate hike by 50 basis points (bps). A fifth half-a-percent rate hike by the RBNZ Governor Adrian Orr will push the Official Cash Rate (OCR) to 3.5%. It would be worth watching whether an OCR above 3% is sufficient to anchor the galloping inflation.
Meanwhile, the US dollar index (DXY) is expected to drop below the immediate cushion of 112.00. The DXY will likely witness a decline ahead of US ISM Manufacturing PMI data. The continuation of ‘the hawkish’ stance on interest rates by the Federal Reserve (Fed) has shrunk the extent of manufacturing activities. Firms have postponed expansion plans due to higher interest rates and bleak demand growth.
Per the projections, the US ISM Manufacturing data will decline to 52.3 vs. the former release of 52.8. Also, the US ISM New Orders Index data, which is an indicator that reflects forward demand is expected to drop significantly to 49.6 against the prior reading of 51.3.
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EUR/USD has preserved its bullish momentum and climbed to its highest level in nearly two weeks above 0.9900 on Tuesday. The broad-based selling pressure surrounding the greenback amid a risk-positive market mood helps the pair stretch higher ahead of Fedspeak.
GBP/USD has lost its traction after having climbed above 1.1400 earlier in the day and declined below 1.1300 heading into the American session. Political jitters in the UK don't allow the British pound to continue to outperform its rivals despite the risk-positive atmosphere.
Gold is extending the overnight breakout momentum through the $1,680-$1,685 supply zone and building on its recovery from the lowest level since April 2020. The sharp drop witnessed in the US Treasury bond yields fuel XAU/USD's rally.
Bitcoin shows a slight increase in momentum that has initiated a consolidation in the form of an ascending parallel channel, which can be seen steadily rising on the four-hour price chart.
AMD showed relative strength on Monday. Shares of the chip designer advanced 4.3% to just above $66. The entire market is rising to start the month of October, but AMD is outperforming most of its peers.
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