NZD/USD jumps back closer to multi-month tops, GDT index in focus

The NZD/USD pair recovered around 100-pips from disappointing NZ CPI-led swing lows and has now moved back closer to an important supply zone near 0.7360-65 region. 

The pair dropped heavily during Asian session on Tuesday in reaction to the latest New-Zealand inflation figures, which missed analyst expectations and was seen encouraging RBNZ to keep the cash rate at the record-low throughout 2017. The quarterly figure came in to show a flat reading for Q2 of 2017, while y-o-y rate recorded a growth of 1.7% as against expectations of 1.9% and 2.2 % reported in the previous quarter. 

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However, persistent US Dollar selling bias, on growing doubts over Trump's ability to deliver on his promised pro-growth reforms, helped the pair to recover early lost ground. Adding to this, fading expectations of additional Fed rate hike action in 2017, further reinforced by the recent slump in the US Treasury bond yields, was also seen driving flows towards higher-yielding currencies - like the Kiwi. 

In absence of any major market moving economic releases from the US, investors focus would remain glued to the outcome of GDT auction, due to be announced later during the day. Against the backdrop of tiny price falls in the previous two auctions, an unexpected rise in the index should help the pair to break through multi-month tops and continue with its near-term appreciating move.]

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Technical levels to watch

A strong follow through buying interest beyond 0.7360-65 area, leading to a subsequent move above yearly tops hurdle near 0.7375 level, should help the pair to reclaim the 0.7400 handle for the first time since Nov. 2016. 

On the flip side, 0.7315-10 area now becomes an immediate support to defend, which if broken could drag the pair back towards 0.7265-60 strong support ahead of its next major support near 0.7220 horizontal level.