NZD/USD bulls stay the course as US dollar continues to fall
|- NZD/USD bears denied as the US dollar continues to bleed out.
- NZD/USD reaches fresh recovery highs for the week.
NZD/USD ended the day on the front foot as the US dollar continued to bleed out into month-end. The DXY index, which measures the greenback vs. a basket of currencies, initially tracked gains in treasury yields as fresh data showed weekly claims fell to a 5-month, and PCE prices were revised higher in Q2. Hawkish remarks from Federal Reserve officials and the rejection of a possible currency agreement among major economies also supported the dollar. However, DXY was thrown back onto the backfoot and extended losses to below 112.00 to print a fresh low of 111.916. NZD/USD ended the day around 0.5270.
The White House National Economic Council Director Brian Deese rejected the idea of another 1985-type currency accord to weaken the dollar and added that the US economy’s relative strength was a significant factor driving the dollar higher. In data, Gross Domestic Product in the US fell at an unrevised 0.6% annualized rate in the second quarter. In other data, Initial Jobless claims for state unemployment benefits dropped to 193,000, versus expectations of 215,000 applications for the latest week.
''The Kiwi is a tad stronger this morning, but having been led higher by EUR and GBP (which may incidentally turn out to be a dead cat bounce), it has underperformed on those crosses,'' analysts at ANZ Bank said, adding: ''nothing local is really driving the Kiwi at the moment, and instead it’s drifting like a cork in the tide.''
''That’s unlikely to change today either, but next week’s RBNZ MPR may provide a degree of support, especially if the RBNZ remain hawkish, which is appropriate given the inflation backdrop. But until then, the Kiwi is at the mercy of global forces, and the pull-back in the USD DXY looks a bit odd against geopolitical developments in Ukraine, given the strength of US jobless claims (pointing to bumper payrolls next week), hawkish Fedspeak, and the very real cracks in the UK that can’t be papered over.''
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.