NZD/USD breaks above 0.6900, amid a risk-on mood

• The NZD trims some of Wednesday’s losses, reclaims 0.6900.
• On Wednesday, the RBNZ hiked 25 basis points the interest rates, leaving the Overnight Cash Rate at 0.50%.
• The market sentiment is upbeat on the back of good US debt-ceiling news.

After plummeting on Wednesday below 0.6900, the NZD/USD is trimming some losses, advancing 0.22%, is trading at 0.6929 during the New York session at the time of writing.

Wednesday’s fall was spurred by the Reserve Bank of New Zealand (RBNZ), which increased the Overnight Cash Rate (OCR) by 25 basis points, leaving the OCR at 0.50%. However, on Thursday an improved market mood boosted the NZD/USD pair.

As the New York session winds down, the market sentiment is positive, as witnessed by the major US stock indices, finishing in the green. The Dow Jones, the S&P 500, and the Nasdaq Composite printed gains of 1%, 0.8%, and 1%, respectively.

The sudden switch on investors’ mood was triggered by an announcement of US Senator Mitch McConnel, leader of the Republican party at the Senate, which agreed to increase the debt ceiling in the short term until December. Since then, negotiations between US President Joe Biden, Democrats, and Republicans intensified.  Further, during the New York session, the US Senate majority leader Chuck Schumer announced an agreement on extending the debt limit by $408 billion until early December.

Adding to the market’s upbeat tone, during the European session, Russian President Vladimir Putin said that it would consider increasing gas supplies in his attempt to stabilize prices.

US Initial Jobless Claims report was better than estimated

New Zealand was absent on the macroeconomic front, whereas the US Initial Jobless Claims report showed fewer Americans applied for unemployment benefits. The reading came at 326K against 348K, estimated by analysts.

On Friday, the Bureau of Labor Statistics (BLS) will release the US Nonfarm Payrolls report. Economists’ median number foreseen is 488K, better than the August reading of 235K new jobs added to the US economy. If the figure comes inline or is better than expected, investors could expect a bond tapering announcement by the FOMC’s November meeting.

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