NZD/USD clings to modest recovery gains above 0.6600
- NZD/USD is staging a technical correction following Tuesday's drop.
- US Dollar Index posts small daily gains near 93.60.
- Upbeat market mood helps risk-sensitive kiwi find demand on Wednesday.
The NZD/USD pair closed the first two trading days of the week in the negative territory and dropped all the way to 0.6610. With the market sentiment improving on Wednesday, the pair staged a rebound and was last seen gaining 0.3% on the day at 0.6640.
Market mood improves on Wednesday
Earlier in the day, the data from New Zealand showed that the ANZ Business Confidence Index improved from -41.8 in August to -26 in September's advanced estimate and the ANZ Activity Outlook Index recovered to -8.9% from -17.5%.
Meanwhile, after suffering heavy losses on Tuesday, major global equity indexes are rising on Wednesday, pointing out to a risk-on market environment that helps the kiwi stay resilient against its rivals. At the moment, the S&P 500 futures are up 0.7% on a daily basis, suggesting that the risk flows are likely to continue to dominate the markets in the second half of the day.
On the other hand, the selling pressure surrounding the major European currencies, especially the British pound, allows the USD to keep its firm footing. As of writing, the US Dollar Index (DXY) was up 0.12% on the day at 93.63, potentially capping NZD/USD's upside for the time being.
Later in the day, JOLTS Job Openings will be the only data featured in the US economic docket and it's unlikely to trigger a significant market reaction.
Technical levels to watch for