NZD/USD: Bulls come up for air in a sigh of relief due to correcting US yields

• NZD/USD bulls come up for air and US dollar sinks. 
• US yields have corrected and the market gives a sigh of relief. 

Trading at 0.6804, NZD/USD is firmly bid just over 1% higher on the day as Wall Street draws to a close. The US dollar was sliding as US yields corrected which gave a boost to risk apatite and the commodity complex. 

''But moves in US bond markets have been swift and brutal, and while markets typically do correct, such moves often turn out to be just that – corrections, rather than direction changes,'' analysts at ANZ bank said. 

''Commodity currencies also rode the coattails of the CAD, which got a boost from significantly stronger CPI data there. We also have CPI data here today, and ANZ is top-of-market, expecting a +2.2% QoQ print that would see annual inflation rise to 7.4% YoY.''

''If it is strong, the knee-jerk reaction in NZD is likely to be higher, but amid a potentially extended period of USD strength as Ukraine weighs on EUR, BoJ policy weighs on JPY, and still rising Fed policy (and QT) expectations give the USD a tailwind, markets might fade the move quickly. Other central banks have a lot of catching up to do and QT still a big threat to US long bonds.''

Meanwhile, as for data on the day, the latest data point on the Federal Reserve's monetary policy tightening plans, its "Beige Book", showed its economy expanded at a moderate pace from February through early April and there was little respite for businesses from high inflation and worker shortages. 

Looking ahead, Fed chair Powell takes part in an IMF panel tomorrow with ECB President Lagarde on the global economy. This will be the last we hear from the chairman until his post-decision press conference on the afternoon of May 4.  It is worth noting also that at midnight Friday, the media blackout ahead of the FOMC meeting takes effect and there will be no Fed speakers the rate decision has been announced.