NZD/USD closed trading on Tuesday with a solid strengthening of more than 50 pips. This means that the currency pair is up about 0.7% amid a wave of US dollar weakening. That put the Dollar Index back just above the 90.00 level.
This pair moved above the 0.7200 level. Meanwhile, the Bulls will be eyeing the possibility of a new push back towards 0.7300. One factor in US dollar reversal is technical sales. The currency moved from Monday's high of 90.70 on Tuesday.
NZD/USD continues to trade for a specific purpose. One of them is as a function of global risk appetite and the dynamics of the US dollar. That's given the lack of economic events, central banks, or even political events related to what happened in New Zealand.
Points In a Financial Release
It is known that in the financial press on Tuesday, a lot of things were contained in it. One is about analysts who are still undecided on their bearish USD call for 2021. Many say that this is the right time to consolidate.
After being a vocal dollar bear last year, many people thought that it is the right time to consolidate in the dollar's downward trend. Then, it seems that they will get the profit (it is due to the negative betting of the dollar against the Euro).
The victory of the Democratic Party in Georgia is closely tied to a big stimulus to give in the coming months. It is the same as reopening the American economy after experiencing many disruptions due to the coronavirus pandemic and political tensions.
For your information, the USA is a country that reports the biggest case of coronavirus. Until now, the country is still struggling. However, they have started using vaccines where yesterday Joe Biden has already shown that he has been vaccinated.
What Makes The Dollar Weaken?
When a currency weakens, there are several factors that can influence it. The examples are financial, political, social, and other conditions faced by a country. Such news is always highlighted to be analyzed by market participants. What about USD?
What makes the dollar weaken? A chairman from JPMorgan, Paul Meggyesi, said that one of the causes of the dollar's weakening is a condition where the Fed will let inflation exceed the target in several months further.
However, investors in the market still look less confident until now. Therefore, some parties want the market to consider again the Fed's plan to outpace the spike is due to post-vaccine inactivity that has enormous potential.
Markus Allenspach from Julius Baer said that higher growth was a sign of better job opportunities. The strength of inflation will also return and eventually lower pressure on the Federal Reserve. It is especially to keep the low-interest rate.
Gold Price Stabilizes Again
The price of gold was reported to be in a stable position on Wednesday. That is based on the data that shows the increasing number of consumer prices in the USA. Furthermore, the hope of economic stimulus from Joe Biden's administration could also trigger higher inflation.
Spot of gold was little changed at about $1,854.84 an ounce. The gold futures of the US closed up 0.6% to $1,854.90. Expectations for more stimulus, higher-than-expected inflation, and safe-haven purchases were factors that kept it stable so far.
The purchase of safe heaven itself is triggered by the political situation in the USA. The Department of Labor stated that the consumer price index increased 0.4% last month. It had earlier rose by 0.2% in November.
These conditions are believed to indicate that there has been a slight rise in inflation, which has always supported gold. Limiting the bullion's rise, the Dollar is reportedly strengthening. In addition, the benchmark 10-year Treasury yield is also close to its highest position.
