NZD/USD holds near strongest levels in a month

The NZD/USD pair is flat into the early close on Wall Street. Traders will look to the Q4 NZIER QSBO survey. The pair moved between a low of 0.6361 and a high of 0.6426, currently flat on the day hovering near its strongest levels in a month.

The NZD benefitted in a risk-on environment since the US dollar was sold off on the back of a switch in sentiment surrounding the Federal Reserve’s interest rate path.

Easing US inflation has fueled bets for a less aggressive tightening from the Federal Reserve at the same time that China’s reopening has bolstered the outlook for the global economy. In turn, there is a demand for commodities for which the Kiwi trades as a proxy to.

However, with US markets closed for Martin Luther King Jr. Day, and liquidity even thinner than it normally is in January, the price action has been minimal on the day and week so far. The NZD has been supported from a monetary policy standpoint after the Reserve Bank of New Zealand embarked on a historic tightening campaign, bringing the cash rate to a 14-year high of 4.25%.