NZD/USD vulnerable to further downside
|- NZD/USD bulls are seeking a firmer correction today in slightly improved risk sentiment.
- Analysts, however warn of the bird's vulnerability.
NZD/USD is currently trading at 0.6916 and is trading down 0.37% on the day between a low of 0.6880 and a high of 0.6954.
Stock markets were better off on Tuesday after Federal Reserve's Chair Jerome Powell showed he was not concerned with the current level of inflation, indicating monetary policy will remain supportive.
All three major market indexes were 1.6% higher, the Dow Jones Industrial Average at 34,518.41, the S&P 500 at 4,324.70 and the Nasdaq Composite at 14,500.58.
The high beta currencies followed suit and recovered from the sell-off lows at the start of the week.
''The Kiwi is at broadly similar levels to those prevailing at this time yesterday, having hit a fresh low for the year before recovering a touch. Equities have bounced and that has helped risk sentiment along, but bond markets remain extremely volatile and GDT auction prices fell around 3%,'' analysts at ANZ Bank explained.
''With plenty of good news priced in (there are at least 3 hikes priced in here in NZ), the NZD is vulnerable to further downside if we do see a souring in global sentiment as the recovery trade gets questioned, but for now, lower bond yields have helped keep risk appetite alive. With no major data out for the remainder of the week, global drivers will rule.''
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