NZD/USD refreshes day’s high above 0.5860 as risk-on impulse rebounds, US GDP/PCE remains key

• NZD/USD has climbed above 0.5860 after a consolidation breakout as the risk-on profile recovers.
• The DXY has remained subdued in the entire Tokyo session ahead of key US economic data.
• Higher projections for durable goods demand in times of escalating core CPI could delight the Fed.

The NZD/USD pair has given a north-side break of the consolidation formed in a narrow range of 0.5818-0.5850 in the Tokyo session. The asset is advancing firmly and has refreshed its day’s high at 0.5860 as the market sentiment has rebounded firmly.

S&P500 futures have picked bids after a corrective Wednesday, which indicates that long liquidation could entirely terminate and the upside journey will resume. The 500-stock basket witnessed losses after a three-day rally on Wednesday as tepid guidance by tech-giant Microsoft (MSFT) weighed pressure on technology stocks.

As the risk appetite theme is regaining strength, the safe-haven appeal could trim further and the US dollar index (DXY) may witness extreme volatility. The DXY has remained sideways in the entire Tokyo session and a subdued performance could further. The 10-year US Treasury yields have rebounded after dropping below 4%. At the press time, the yields were being offered at 4.03%, 0.32% above Wednesday’s close.

Going forward, US economic data will be a key trigger for decisive action. Starting from the US Gross Domestic Product (GDP) data, expectations claim a growth rate of 2.4% for the third quarter against a drop of 0.6%. Also, the demand for durable goods is seen higher at 0.6%. An increment in durable goods orders despite the soaring core Consumer Price Index (CPI) could delight the Federal Reserve (Fed).

The show-stopper US core Personal Consumption Expenditure (PCE) data is seen lower at 4.7% vs. the prior release of 4.7%.