New Zealand Dollar awaits US data following rate holds by both central banks

• NZD/USD recovers after its first dip below 0.5600 since 15 October.
• US rates remain 1.00-1.25 percentage points above New Zealand's as the Fed also stays on hold.
• Thursday brings US growth and price data, followed by New Zealand confidence figures.

A rate increase was priced at close to 90%, but the Reserve Bank of New Zealand (RBNZ) maintained its rate at 2.75% on Wednesday, when both central banks relevant to NZD/USD left policy unchanged. The RBNZ decision sent the pair below 0.5600 for the first time since 15 October. It has subsequently recovered from that low to trade just above 0.5600.

All five of New Zealand's major banks had predicted a third consecutive increase, but the RBNZ voted 4-3 to leave rates unchanged, with Governor Breman among the four supporting the hold. The outcome put New Zealand's rate a quarter-point below the level traders had anticipated. Despite the committee having just voted against tightening, the RBNZ said in its statement that tighter policy remained likely.

Later in the session, the Fed maintained its rate at 3.75%-4.00%, preserving a US rate advantage over New Zealand of 1.00-1.25 percentage points. Declining to speculate about December, Fed Chair Warsh said he does not prejudge meetings. Although NZD/USD inched up during his remarks, the bulk of its recovery from the low reached after the RBNZ decision had occurred before the Fed announcement.

US releases and New Zealand confidence come into focus

Thursday's 12:30 GMT release is expected to show US personal spending rising 0.6% in September, following 0.9%, while income growth is forecast at 0.3%, up from 0.2%. At 13:45 GMT on Friday, the Chicago Purchasing Managers Index (PMI) is expected to register 56.1, compared with 58.8 previously. Both releases will inform the Fed's December decision, shaping the US side of the interest rate differential for NZD/USD.

The first New Zealand release since the decision to hold rates will be October's ANZ-Roy Morgan consumer confidence reading, due at 21:00 GMT on Thursday, following 97.6 previously. December brings the RBNZ's next decision; an increase would require one of the four members who backed unchanged rates to change position.

NZD/USD returns to its earlier range

More than four-fifths of the advance from the 14 October low just above 0.5550 to the 22 October high just above 0.5700 was erased by Wednesday's decline. The move returned NZD/USD to the range below 0.5650 in which it traded from 1 to 15 October. Just above 0.5700 sits the pair's 50-day Exponential Moving Average (EMA), while its 200-day EMA lies just below 0.5800.

NZD/USD on the daily chart