NZD/USD trades above 0.5830, adds more than 2% on USD selloff, upbeat sentiment
- Global equity indexes rise sharply on Monday as risk appetite returns.
- USD continues to weaken against major rivals following Fed's policy actions.
- Coming up: Markit and ISM PMI figures from US.
The NZD/USD pair closed the first day of the week with small gains above the 0.5700 handle and gained traction on Tuesday as the improving market sentiment helped the risk-sensitive NZD find demand. As of writing, the pair was trading at 0.5835, adding 2.02% on a daily basis.
Risk-on flows lift NZD/USD on Tuesday
Drastic drastic measures taken by major central banks to support financial markets finally seem to be providing the relief investors need since the coronavirus crisis began. Reflecting the upbeat mood, Germany's DAX is up 6.4% on the day while the Euro Stoxx 50 is adding 5.75%. Moreover, the S&P 500 futures hit the upper limit of 5% on Tuesday to suggest that Wall Street is likely to open the day sharply higher.
On the other hand, with the Federal Reserve launching an open-ended quantitative easing program on Monday, the buying pressure on the USD softened and helped the pair push higher. The US Dollar Index, which tested the 103 mark at the start of the week, was last seen erasing 1.22% on the day at 101.22.
During the American trading hours on Tuesday, the IHS Markit's preliminary Manufacturing and Services PMI and the ISM's Manufacturing PMI figures will be watched closely by the market participants for fresh clues regarding the slowdown in the economic activity.
Technical levels to watch for