- NZD/USD staged a modest bounce from sub-0.7200 levels, albeit lacked any follow-through.
- A combination of factors benefitted the USD and capped the attempted intraday recovery.
- Dovish comments by Fed’s Clarida were offset by surging US bond yields, stronger US CPI.
- The prevalent risk-off mood exerted some additional pressure on the perceived riskier kiwi.
The NZD/USD pair stalled its early North American session bounce near the 0.7245 region and dropped back closer to daily lows, albeit has still managed to hold above the 0.7200 mark.
The pair witnessed some heavy selling and momentarily slipped below the 0.7200 mark, or four-day lows in reaction to hotter-than-expected US consumer inflation figures. In fact, the headline CPI posted the largest rise since September 2008 and accelerated to 4.2% YoY in April. Apart from this, the core CPI also surpassed expectations and jumped 3.0% YoY from 1.6% recorded in the previous month.
The data added to the market worries that the rapid rise in inflation may be something more than transitory and could push the Fed to tighten its policy earlier than expected. This, in turn, provided a strong lift to the US dollar and exerted some heavy pressure on the NZD/USD pair. The USD, however, lost some traction after Fed Governor Richard Clarida reiterated that inflation above 2% is due to transitory factors and highlighted uncertainty about the near-term labour market outlook.
That said, a sharp spike in the US Treasury bond yields acted as a tailwind for the greenback. This, along with the prevalent risk-off mood, further underpinned the USD's relative safe-haven status. The anti-risk flow was evident from an extended selloff in the global equity markets, which was seen as another factor that weighed on the perceived riskier kiwi. However, the lack of any strong follow-through selling warrants some caution before positioning for any further depreciating move.
Technical levels to watch
|Today last price||0.7212|
|Today Daily Change||-0.0060|
|Today Daily Change %||-0.83|
|Today daily open||0.7272|
|Previous Daily High||0.729|
|Previous Daily Low||0.7251|
|Previous Weekly High||0.7301|
|Previous Weekly Low||0.7115|
|Previous Monthly High||0.7287|
|Previous Monthly Low||0.6945|
|Daily Fibonacci 38.2%||0.7266|
|Daily Fibonacci 61.8%||0.7275|
|Daily Pivot Point S1||0.7252|
|Daily Pivot Point S2||0.7232|
|Daily Pivot Point S3||0.7213|
|Daily Pivot Point R1||0.7291|
|Daily Pivot Point R2||0.731|
|Daily Pivot Point R3||0.733|
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.