The Kiwi is the top performer in today’s trading session so far, accelerating northwards to clinch 0.72 handle. The New Zealand dollar extends its bullish streak into a second day this Tuesday, amid a generalized selling seen in the greenback after yesterday’s dismal economic performance from the US economy.
A poor streak of US economic data poured cold water over Fed’s rate hike prospects this year and hence steepened the treasury yields curve, as the 2-year treasury yields, which reflect short-term interest rates expectations, drop sharply. This widened the NZ-US 2-yr yield spread in favor of a stronger NZD, which is seen as one of the main reason behind the ongoing rally in the major.
Besides, higher oil and metal’s prices combined with falling VIX futures (fear gauge), also add to the upbeat tone behind NZD/USD. While the bulls continue to cheer stronger-than expected NZ CPI data released earlier on the day. NZ CPI unexpectedly rose in Q3 versus no growth expected during the same period. More so, a latest RBNZ report showed that 3Q sectoral factor model inflation index rose 1.5% y/y,
All eyes now remain on the US CPI report and New Zealand Fonterra’s fortnightly dairy auction results due later in the NA session. While the main risk event for this week remains the Chinese GDP figures due on the cards tomorrow, along with industrial production and retail sales data.
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