NZD/USD retraces post-Fed gains, eyes on NZ/China data for now

• NZD/USD looks for fresh catalysts to extend the latest rise.
• The Federal Reserve matched market expectations of 0.25% rate cut, flashed mixed signals, USD declined after the event.
• US-China trade optimism renews backed by Global Times’ headlines/Tweets.

Following its run-up to a four-day high, NZD/USD consolidates gains to 0.6388 at the start of Thursday’s Asian session.

Despite initial inactivity ahead of the US Federal Reserve’s (Fed) monetary policy decision, the Kiwi pair registered heavy gains by the end of the Fed day. The United States’ (US) central bank matched broad consensus of announcing a third consecutive rate cut, of 25 basis points (bps). Even if the rate statement and Chairman Jerome Powell talked down any further rate cuts and painted a rosy picture of the US growth scenario, markets seem largely concerned about the downbeat comments on Inflation and the flow of rate cuts so far.

Elsewhere, China’s Global Times (GT) quotes a government official to turn down any negative impacts of the cancellation of the next month’s Asia-Pacific Economic Cooperation (APEC) summit in Chile. In another piece GT also cited the need for a trade deal for US manufacturers.

It should, however, be noted that the US Treasury Secretary Steve Mnuchin recently said that no trip has been planned to Beijing for more in-person talks.

Moving on, investors will now focus back to economic calendar carrying New Zealand’s monthly Building Permits for September and ANZ Business Confidence and Activity Outlook data for October ahead of China’s official Purchasing Managers’ Index (PMI) numbers.

While markets anticipate mixed statistics from New Zealand (NZ) and upbeat manufacturing activity numbers from China, TD Securities is of the same view but holding the breath for a number below neutral figure of 50.00 from the dragon nation.

Technical Analysis

A successful U-turn from the confluence of 21/50-day Simple Moving Averages (SMA), around 0.6340/45 now, seems to be on the test unless breaking 0.6400 round-figure, which in turn could escalate the recovery towards monthly high of 0.6437 and September month top near 0.6455. On the downside, pair’s declines below 0.6340 will recall 0.6300 on the chart.