NZD/USD extends recovery past 0.5600 after FOMC minutes

• The Kiwi gains traction and reaches session highs past 0.5600.
• The US dollar loses ground after the release of the Fed's minutes. 
• NZD/USD's downtrend could extend to 0.50 – ING

The New Zealand dollar is taking advantage of a moderate US dollar pullback. The pair has rushed past 0.5600 on Wednesday's US session, to hit session highs at 0.5630 so far.

The US dollar eases after Fed’s minutes

The greenback lost ground immediately after the release of September’s Federal Reserve meeting minutes. The US Dollar Index has dropped to session lows below 113.00, triggering moderate advances on its main rivals.

The Federal Reserve's minutes reflect the committee's surprise at the pace of inflation and reiterate the bank's commitment to keeping hiking rates until the problem shows signs of resolving.

Investors, however, have analyzed one comment as a potential sign of moderation in the monetary tightening pace, which might explain USD's reversal. According to the meeting minutes, “Several participants noted that, particularly in the current highly uncertain global economic and financial environment, it would be important to calibrate the pace of further policy tightening with the aim of mitigating the risk of significant adverse effects on the economic outlook,”

NZD/USD might extend its downtrend towards 0.50 – ING

From a wider perspective, FX analysts at ING remain bearish in the long-term: The Reserve Bank of New Zealand hiked by another 50 bps in October and signalled more tightening is on the way. Another 50 bps increase is largely expected at the November meeting. The role of monetary policy remains secondary compared to global risk dynamics (…) NZD/USD is looking at the 0.50 2009 lows as the next key support"

Technical levels to watch