NZD/USD eyes 0.7000 as intensifying Russia-Ukraine fears underpin commodity prices
- NZD/USD is looking to capture 0.7000 despite the headwinds of the risk-aversion theme.
- The DXY has faced long liquidations above 99.00.
- The rising bets over a 50 bps rate hike by the Fed has failed to strengthen the greenback against the kiwi.
The NZD/USD pair looks to climb near 0.7000 as the antipodeans are outperforming the mighty greenback on rising commodity prices. The major has opened near Friday’s value area high at 0.6846 and has extended gains after overstepping Friday’s high at 0.6872. The asset is trading around 0.5% above Friday’s close at the press time.
NZD/USD has continued its three-day winning streak on upbeat commodity prices. The kiwi has been underpinned against the greenback despite rising expectations of a 50 basis point interest rate hike in March’s monetary policy meeting. Stronger-than-expected US Nonfarm Payrolls data on Friday and expectations of soaring inflation data later this week have backed an aggressive monetary policy stance next week.
It is worth noting that the Reserve Bank of New Zealand (RBNZ) has raised its official cash rate (OCR) by 75 basis points (bps) in the last five months. The RBNZ is continuously tightening the leakage of liquidity to contain the roaring inflation. This is also the major driver that has been supporting the kiwi to perform strongly against the mighty greenback despite the broad risk-aversion theme in the market.
It is likely expected that firmer commodity prices will continue to support the kiwi as the Russia-Ukraine war will keep on escalating. Russian leader Vladimir Putin seems not interested in any diplomatic solution and is resorting to war to fulfill Russia’s demands.
Meanwhile, the US dollar index (DXY) is struggling to sustain above 99.00 amid the long liquidations after a strong upside move.
This week, the US Consumer Price Index (CPI) data on Thursday will keep the investors on their toes. While, the kiwi docket will report the Business NZ PMI data, which is expected to land at 54.5 against the prior print of 52.1.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
