S&P 500 gains, US dollar sinks after Richmond Fed manufacturing data. All eyes on the RBNZ | So Good News

dollar NZD/USD RBNZ Rate Decision – Opening Asia Pacific Markets.

Asia-Pacific Market Brief – Soft Data Highlights Slowing Inflation

Sentiment on Wall Street improved significantly on Tuesday. S&P 500; The Dow Jones and Nasdaq 100 rose 1.2%, 1.1% and 1.3%, respectively. For the S&P 500; This means the best day in less than two weeks. Because of the adventurous tone. The peg-linked US dollar was penalized as it sank above its major peers. The sentiment-linked New Zealand and Australian dollars performed well.

See the chart below; Around the time of the Richmond Fed Manufacturing Index data release, we can see risk appetite becoming extremely bullish. The figure surprised at -9 and -8, and was trimmed from -10 in October. Looking at the details of the data, the price paid and wage shares are shrinking, and the story of slowing inflation is clearer.

Treasury yields have weakened along the curve; It’s likely a sign traders are easing expectations of a tough Federal Reserve rate hike for next year. Unsurprisingly, gold prices fell against the greenback after the data, despite falling bond yields. Traders appear to be more focused on stockpiling stocks as Fed officials continue to present a slow rate hike narrative.

S&P 500; US dollar Treasury Yields Tuesday

Chart created in TradingView

Wednesday’s Asia Pacific Trade Sector – Outlook on RBNZ; A positive attitude

All eyes will be on the New Zealand dollar during Wednesday’s Asia-Pacific trading session. Because the Reserve Bank of New Zealand’s monetary policy announcement will cross the lines. A jumbo 75-basis point rate hike from 3.50% to 4.25% was widely expected. This follows higher-than-expected domestic inflation and a still tight labor market.

The central bank will also release new economic forecasts. NZD/USD could go up a storm, especially if the central bank signals that it will continue to tighten aggressively amid slower climbs elsewhere. Speaking of which, Wall Street’s rosy voice could open the door to continued risk appetite. This could bode well for indices such as the Nikkei 225 and ASX 200.

S&P 500 Technical Review

The S&P 500’s rally brought the index back to test the 61.8% Fibonacci retracement level at 4012. In early November, the index tried to breach this key point without luck and left the top. Therefore, Another follow-up approval is likely to be needed to argue that the route could resume from October. Prices are still trading within a bullish Wedge chart pattern, which may have bearish implications along the way.

S&P 500 Futures Daily Chart

Chart created in TradingView

— Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com.

Contact Daniel Follow him on Twitter.@ddubrovskyFX