New Zealand Dollar awaits US data after both central banks hold rates

• 0.5600 breached: NZD/USD recovers after first dip below the level since 15 October.
• 1.00-1.25 percentage points: US rate premium over New Zealand remains as Fed also holds.
• Thursday brings US growth and price data, followed by New Zealand confidence figures.

2.75% remained the Reserve Bank of New Zealand's (RBNZ) policy rate. Both central banks driving NZD/USD kept rates unchanged on Wednesday, despite markets pricing a near 90% probability of an RBNZ hike. The New Zealand decision sent NZD/USD below 0.5600 for the first time since 15 October. The pair has since recovered from its low to trade just above 0.5600.

All five of New Zealand's major banks had predicted a third consecutive increase. Instead, the RBNZ voted 4-3 to hold, with Governor Breman in the four-member majority. The outcome put New Zealand's rate a quarter-point below traders' expectations. Despite voting against tighter policy, the committee said in its statement that tightening was still likely.

Later in the session, the Fed maintained its rate at 3.75%-4.00%, preserving a US premium of 1.00-1.25 percentage points over New Zealand. Asked about December, Fed Chair Warsh declined to speculate and said he does not prejudge meetings. Although NZD/USD moved slightly higher during his remarks, most of its recovery from the RBNZ-driven low had occurred before the Fed announcement.

December policy inputs: upcoming data

Thursday's 12:30 GMT release is expected to show US personal spending rising 0.6% in September, following 0.9%, and income increasing 0.3%, after 0.2%. On Friday at 13:45 GMT, the Chicago Purchasing Managers Index (PMI) is forecast at 56.1, down from 58.8. Both releases will inform the Fed's December decision, shaping the US side of the NZD/USD interest-rate differential.

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

0.5650 caps NZD/USD's restored 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 its 1 to 15 October trading range below 0.5650. Its 50-day Exponential Moving Average (EMA) sits just above 0.5700, while the 200-day EMA lies just below 0.5800.

NZD/USD: daily price chart