NZD/USD recovers recent losses on improved market sentiment, trades above 0.5850
25.10.2023, 02:16

NZD/USD recovers recent losses on improved market sentiment, trades above 0.5850

  • NZD/USD maintains a position above 0.5850 despite the upbeat US Dollar.
  • Israel's delay in the ground assault plan in Gaza contributes support to the risk-on sentiment.
  • China's updates appear to be influencing market sentiment positively.
  • US Dollar received upward support on stronger PMI figures.

NZD/USD retraces recent losses, trading at around 0.5860 during the Asian session on Wednesday. The uptick is influenced by improved risk sentiment, with the postponement of Israel's ground assault plan in Gaza contributing support to the pair.

Furthermore, the optimistic outlook is being reinforced by China's intention to issue additional sovereign debt. Additionally, constructive dialogues between the United States and China during their initial economic working group meeting contributed to the positive sentiment.

However, the NZD/USD pair could face challenges as the situation in the Middle East created unease among investors due to the potential for escalation, which could lead to disruptions in the region. Moreover, diplomatic efforts are actively underway to ease tensions in the Israel-Hamas Gaza Strip conflict.

The US Dollar Index (DXY) rebounded from monthly lows, hovering around 106.20 on the back of upbeat preliminary S&P Global PMI figures from the United States released on Tuesday.

However, the downfall in US Treasury yields could provide downward pressure for the US Dollar (USD), with the 10-year yield standing at 4.81%.

US S&P Global Composite PMI exhibited growth in October, rising from 50.2 to 51.0. The Services PMI also saw an increase, reaching 50.9, and the Manufacturing PMI rose to 50.0. This marks the first time in the last six months that manufacturing has sustained a level above the 50-point threshold, signaling a positive shift in that sector.

Investors will likely monitor the US Q3 Gross Domestic Product (GDP) on Thursday. The US Core Personal Consumption Expenditures (PCE) and Kiwi’s ANZ – Roy Morgan Consumer Confidence will be eyed on Friday.

 

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