NZD/USD marches steadily around 0.5800 despite a buoyant US Dollar

• NZD/USD seesaws around 0.5800 amidst overall US Dollar strength.
• A mixed sentiment keeps some high-beta currencies trending higher, though capped by a buoyant greenback.
• The US-3-month/10-year yield curve is inverted, meaning that the US could hit a recession within the next 12 months.

The NZD/USD slightly advanced during the mid-North American session, despite overall US Dollar strength, though the New Zealand dollar, after reaching a fresh three-day low, bounced off and reclaimed the 0.5800 figure. At the time of writing, the NZD/USD is trading at 0.5812, almost flat.

NZD/USD fluctuates as investors get ready for the Fed

US equities are trading within a mixed tone due to the deteriorated sentiment. Some US Federal Reserve regional banks unveiled PMI and Business Indices, namely the Chicago and Dallas Fed. The Chicago manufacturing PMI came at 45.2, lower than the 47.0 estimates, while the Dallas Fed Manufacturing Business Index dropped even further to -19.4 from -17.4 expected, exacerbating US recession fears around the financial markets.

Additionally, traders should be aware that the spread between the US 3-month/10-year turned negative, meaning that the yield curve inverted for the first time since March of 2020, signaling that a US recession is arriving, according to analysts at BBH.

In the meantime, geopolitical jitters like Russia’s blocking Ukraine from exporting grains, alongside a weaker-than-estimated China’s PMI figures, would likely keep the safe-haven US Dollar underpinned, even though the US economy is likely to head into a recession.

Also, the lack of tier 1 economic data keeps traders focused on the Federal Reserve’s decision. However, NZD/USD traders should be aware that November 1 ISM Manufacturing PMI for October could be the first domino of some usual “leading” indicators to flash signals of an impending slowdown in the US. Also, the JOLT’s report and the ADP Employment Change, ahead of the Fed’s policy meeting, would shed some light regarding the future outcome of the US Dollar.

NZD/USD Daily Chart