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Forex News - NZD/USD jumps to 0.7055 as the US dollar slides across the board

  • US dollar drops across the board after US CPI data.
  • NZD among top performers on Wednesday, supported by RBNZ expectations and risk appetite.

The NZD/USD jumped from 0.7000 to 0.7055, reaching the highest level since Friday following the release of US inflation numbers. The pair then pulled back, finding support at 0.7035. The kiwi is consolidating the rebound from the 20-day simple moving average that stands at 0.6980. AUD/NZD is back at the monthly low at 1.0455.

US data triggers dollar’s slide

The Consumer Price Index grew at an annual rate of 5.4% in July, the same of June (highest in 13 years). The CPI rose 0.5%, in line with market expectations. The greenback dropped sharply across the board after the numbers, amid a rally in US Treasuries. Also higher equity prices contribute to weaken the US dollar.

If expectations about a sooner-than-expected taper from the Federal Reserve gain more intensity, the dollar could recover momentum. Still, analysts at Westpac consider the kiwi should be more resilient than most developed currencies to USD strength given New Zealand’s strong fundamental outlook.

“Multi-month, the NZD is supported by the NZ economy’s expected strength over the remainder of this year, the RBNZ’s signalled rate hikes, NZ-US yield spreads, and a positive outlook for NZ commodity prices. Our year-end forecast for NZD/USD is 0.74 (which is coincidentally where our estimate of fair value currently is)”, argue Westpac analysts.

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Forex News - NZD/USD remains steady around 0.7000 as USD weakness limits downside

  1. NZD/USD is moving sideways around 0.7000 on Friday.
  2. US Dollar Index pushes lower toward 92.80 ahead of American session.
  3. UoM Consumer Sentiment Index data from US will be looked upon for fresh impetus.

After losing more than 40 pips on Thursday, the NZD/USD pair seems to have gone into a consolidation phase on Friday and was last seen rising 0.12% on the day at 0.7007.
Falling US T-bond yields weigh on DXY

The renewed USD weakness ahead of the American session seems to be helping NZD/USD stay in the positive territory. Pressured by a more-than-1% decline witnessed in the benchmark 10-year US Treasury bond yield, the US Dollar ındex is losing 0.18% on a daily basis at 92.82.

Earlier in the day, the data from New Zealand showed that the Business NZ PMI improved to 62.6 in July from 60.7 in June. This reading came in better than the market expectation of 56.6 but failed to trigger a noticeable market reaction.

The University of Michigan's preliminary Consumer Sentiment Index data for August will be the last data of the week featured in the US economic docket. Investors expect the index to stay unchanged at 81.2 following July's modest decline. Although an upbeat reading could help the USD gather strength ahead of the weekend, NZD/USD is unlikely to make a sharp move in either direction amid thin trading conditions.

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