NZD/USD bulls follow the Aussie's lead

NZD/USD is trading at 0.7174 and flat on the day in a quiet start to Friday's Asian session where traders will be watchful for corrections in US yield  |  15/04/2021 23:13
  • NZD/USD supported on the bid as US yields fall to weekly lows. 
  • The US dollar is dragged down despite bumper US data.

NZD/USD is trading at 0.7174 and flat on the day in a quiet start to Friday's Asian session where traders will be watchful for corrections in US yields and the US dollar. 

The kiwi has stuck to a 0.7166/77 range so far, following a slightly wider 0.7150/80 range from overnight. 

AUD has been more of a catalyst than anything relating to the bird but the focus has been firmly on the US dollar and US yields. 

AUD/USD has been the main beneficiary of dollar weakness considering the strong Aussie jobs data from yesterday, dragging the kiwi higher. 

The US 10-year yield printed a low of 1.5290% to the lowest levels in more than a month and the DXY printed a low of 91.49.

However, a subsequent correction in US yields as investors could see the greenback surge again, but there is a long way to claw back from the weekly support structure in the 10-year yield. 

However, the bumper US data from overnight would be expected to be a catalyst for higher yields and the greenback falling into line as investors pile into the stock markets.

''While the move looks like classic short-covering and could have been exacerbated by hedging flows related to the flood of US corporate/bank bond issuance, and could thus be quickly unwound, it has nonetheless helped underscore risk appetite,'' analysts at ANZ bank argued.

''It’s been an interesting week, let’s see what next week brings. Local data today is unlikely to perturb the NZD with just the Business PMI out.''

What analysts are we watching?

Consumer Price Index inflation for the first quarter is released on Wednesday.

''We think consumer prices rose 0.7% q/q (1.3% YoY). That’s off a 0.5% QoQ rise in Q4.

The bottom line is we don’t expect the data to be a game changer for the RBNZ. Of particular note was MBIE job vacancies data for March – this data can be volatile, but even when we smooth it, we’re looking at a record high for the series,'' analysts at ANZ bank argued.

 

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