NZD/USD marches towards 0.6250 as US Dollar drops ahead of Fed Chair Powell’s speech

• NZD/USD remains firmer for the second consecutive day.
• Kiwi bulls ignore downbeat NZ Building Permits, China PMIs amid cautious optimism.
• US Dollar snaps three-day uptrend as traders await Fed Chair Powell’s first speech since November meeting.

NZD/USD follows the other Antipodeans to cheer the US Dollar weakness while refreshing intraday high near 0.6235 during the initial hours of Wednesday’s European trading. In doing so, the Kiwi pair pays little heed to the downbeat statistics at home and in China while benefitting from the market’s cautious optimism surrounding Covid conditions.

New Zealand’s Building Permits slumped seasonally adjusted 10.7% MoM in October versus a 2.4% expected increase and 3.6% prior growth. Also, China’s officials NBS Manufacturing PMI dropped to 48.0 in November versus 49.2 market forecasts and 49.0 prior whereas the Non-Manufacturing PMI declined to 46.7 from 48.7 prior and 51.7 anticipated.

On the positive side, a second consecutive daily fall in China’s covid numbers from an all-time high backed the nation’s optimism over tackling the pandemic woes, which in turn favored NZD/USD bulls due to New Zealand’s trading ties with China.

Elsewhere, US Dollar Index (DXY) snap a four-day uptrend as it drops to 106.55, down 0.25% intraday at the latest. The Greenback’s gauge versus the six major currencies traces downbeat US 10-Year Treasury bond yields, down two basis points to 3.72%, to print the latest losses. The DXY’s latest losses could also be linked to the softer US data as the Conference Board (CB) Consumer Confidence Index dropped to 100.2 in November versus 102.2 prior (revised down from 102.5).

Against this backdrop, S&P 500 Futures print mild gains even as Wall Street closed mixed while the Asia-Pacific stocks grind higher.

Moving on, NZD/USD traders should pay attention to the US Federal Reserve (Fed) Chairman Jerome Powell’s first speech since the November meeting as the policymaker is likely to defend the central bank’s rate hike trajectory even if the easy lift stays on the table. Also important to watch will be an early signal for Friday’s United States Nonfarm Payrolls (NFP), namely the ADP Employment Change for November, as well as the second readings of the US Gross Domestic Product (GDP) for the third quarter (Q3).

It’s worth mentioning that the Reserve Bank of New Zealand’s (RBNZ) hawkish bias defends the NZD/USD bulls as the policymakers turn down the need of easing rate hikes by citing inflation fears.

Technical analysis

Unless rising back beyond the previous support line from November 10, around 0.6280 by the press time, NZD/USD sellers remain hopeful of revisiting the 21-DMA support near 0.6080.