NZD/USD drops below 0.6400 ahead of US data
- NZD/USD loses its bullish momentum after rising to 0.6430.
- Risk-on flows continue to dominate financial markets on Wednesday.
- US Dollar Index stays near 97.50 ahead of US data.
The NZD/USD pair rose for the third straight day on Wednesday as the kiwi continued to find demand in the risk-on market environment. Furthermore, the upbeat Chinese data provided an additional boost to the pair during the Asian trading hours.
After touching its highest level since early March at 0.6431, however, NZD/USD has gone into a consolidation phase and was last seen trading at 0.6390, still gaining 0.33% on the day.
Earlier in the day, the data from China showed that the business activity in China's service sector expanded at a robust pace in May with the Caixin PMI rising to 55 from 44.4 in April. Meanwhile, reflecting the upbeat market mood, major European equity indexes are registering strong gains.
DXY pulls away from lows ahead of key data releases
On the other hand, the US Dollar Index (DXY), which slumped to a fresh multi-month low at 97.30 on Wednesday, recovered modestly to 97.50 area ahead of US data and caused the pair to retreat from its highs.
During the American session, the ADP Employment Change and the ISM Non-Manufacturing PMI data will be featured in the US economic docket.
Previewing the ADP data, “private payrolls administered by Automatic Data Processing (ADP) are expected to shed 9 million workers in May after dropping 20 million workers in April," noted FXStreet analyst Joseph Trevisani. “Unless the ADP numbers are considerably better than expected, reinforcing the economic recovery scenario, they will have marginal trading impact. Disaster is old news already.”
Technical levels to watch for