NZD/USD Advances Toward 0.6110 Despite Risk Aversion

NZD/USD is on the rise, reaching around 0.6110 during the early European session on Monday, rebounding after two consecutive days of losses. The US Dollar (USD) remains robust despite a prevailing risk-averse sentiment following a drone attack on a US post in Jordan. Despite this, the NZD/USD pair has managed an upward trajectory.

The New Zealand Dollar (NZD) appears to be supported by the People’s Bank of China’s (PBoC) potential consideration of reducing the Medium-term Lending Facility (MLF) rate. Given the strong trade ties between China and New Zealand, any shifts in China’s monetary policy can influence the Kiwi Dollar. Additionally, efforts by Chinese authorities to stabilize the stock market could offer support to the New Zealand currency.

Statistics New Zealand reported a Trade Balance NZD (YoY) of $-13.57B for December, a slight improvement from the previous reading of $-13.90B. Exports in December decreased to $5.94B compared to $5.99B in the previous period, while Imports declined from $7.20B in November to $6.26B.

Investors are closely monitoring the possibility of the Federal Reserve (Fed) implementing policy adjustments in response to signs of a slowdown in US inflation. The CME FedWatch Tool indicates a 53% probability, according to futures traders, that the Fed might cut interest rates for the first time in this cycle during the March meeting.

Traders are expected to pay close attention to key economic indicators, particularly the US Housing Price Index and Consumer Confidence figures scheduled for release on Tuesday, providing further insights post the upcoming Federal Open Market Committee (FOMC) meeting.

NZD/USD: TECHNICAL LEVELS TO WATCH