NZD/USD hits fresh one-month top near 0.6015 area, reacts little to Chinese macro data

• NZD/USD reverses an Asian session dip and moves back to over a one-month top set on Tuesday.
• The mixed Chinese macro data does little to provide any impetus amid a modest USD recovery.
• Expectations that the Fed is done with its rate-hiking cycle should cap the USD and favour bulls.

The NZD/USD pair attracts some dip-buying during the Asian session on Wednesday and climbs back above the 0.6000 psychological mark in the last hour. Spot prices touch a fresh one-month peak, around the 0.6015 area in the last hour and react to the mixed Chinese macro data.

The National Bureau of Statistics reported that China's Industrial Production rose by 4.6% YoY pace in October, slightly better than consensus estimates and the 4.5% growth registered in the previous month. Adding to this, the monthly Retail Sales also surpassed market expectations and advanced 7.4% over the past 12 months through October. This, to a larger extent, overshadows the disappointing release of Fixed Asset Investment, which climbed by 2.9% YoY rate during the reported month as compared to the 3.1% anticipated and September reading. The data, however, does little to provide any meaningful impetus to the NZD/USD pair in the wake of a modest US Dollar (USD) uptick.

In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, recovers a part of the overnight slump to the lowest level since September 1 and acts as a headwind for the major. Any meaningful upside for the USD, however, seems elusive on the back of growing acceptance that the Federal Reserve (Fed) is done with its rate-hiking cycle. The bets were lifted by the softer US consumer inflation figures on Tuesday, which triggered a steep decline in the US Treasury bond yields and should continue to act as a headwind for the buck. Apart from this, the prevalent upbeat market mood is likely to undermine the safe-haven USD and drive flows towards the perceived riskier Kiwi.

The aforementioned fundamental backdrop suggests that the path of least resistance for the NZD/USD pair is to the upside. Hence, any meaningful corrective decline could be seen as a buying opportunity and remain limited. Market participants now look to the US economic docket, featuring the release of the Producer Price Index (PPI), monthly Retail Sales figures and the Empire State Manufacturing Index later during the early North American session. This, along with the US bond yields and the broader risk sentiment, might influence the USD price dynamics and produce short-term trading opportunities around the NZD/USD pair.

Technical levels to watch