Ella 
In Asia on Wednesday, the NZD/USD pair was unable to extend its rebound from a one-week low of 0.5910 late overnight, and was still on the defensive. NZD/USD is currently trading around 0.5930 and looks set to easily extend this week’s pullback since the psychological 0.6000 mark, the highest level since October 12 hit on Monday.
The US dollar paused slightly, consolidating its strong recovery over the past two days, thus providing some support for NZD/USD. The decline in U.S. bond yields and the generally positive risk tone have curbed the trend of safe-haven currencies. However, traders seemed reluctant to make aggressive bets, preferring to wait for new clues on the Fed’s path to raising interest rates in the future.
Investors appear to believe that the Fed’s interest rate hike cycle is nearing its end, as was reaffirmed by weak monthly U.S. employment data released on Friday. That said, several Fed officials this week acknowledged the resilience of the U.S. economy and left the door open to further interest rate increases. Therefore, Fed Chairman Powell’s speech will provide a signal for the next policy move, which will drive demand for the dollar.
At the same time, growing concerns about China’s deteriorating economic conditions, further exacerbated by China’s lackluster trade balance data on Tuesday, may continue to pose headwinds for Australian and New Zealand currencies, including the New Zealand dollar. In addition to this, expectations that the Reserve Bank of New Zealand (RBNZ) will keep policy rates unchanged in November suggest that NZD/USD has the least downside resistance.
