- NZD/USD bulls are attempting to correct the US dollar's advance.
- However, there are prospects for a longer bullish rin in the greenback.
NZD/USD is trading at 0.7006 and flat n the day as traders wind down for the weekend following a turbulent and busy past few sessions surrounding both domestic and non-domestic key events.
The main event came in the US Federal Reserve's surprise hawkish hold.
Fed's chair, Jerome Powell described the Federal Open Market Committee meeting as the 'talking about talking about' meeting.
Critically for markets, the Fed members are likely to now be seeking a plan to reduce the pace of QE which has driven a bid into the US dollar.
Additionally, members of the board are also bringing forward their projections from flat to +50bp in rate hikes by end-2023.
The DXY has powered ahead is trading at the highest since April 13, taking on the 92 level with a high after easily breaking above the 200-day moving average near 91.538.
Bulls now have sights on a test of the March 31 high near 93.437.
This has sunk the kiwi despite strong New Zealand first quarter Gross Domestic Product.
''Inflation expectations have also eased back in reaction to the Fed’s updated guidance, which is an additional positive for the greenback'' analysts at ANZ Bank argued.
This is evident in today's bond markets.
Yield curves flattened led by a strong rally in US medium and longer-dated securities as US inflation expectations fell back sharply.
The US 10-year yield fell sharply from 1.5940% to a low of 1.4690%, ending the day down -4.00%.
The yield on the US 30-year bond also fell to its lowest level since late February.
All of this is a sign that the market is clearly of the conviction that the rise in inflation is transitory.
''The USD’s rise may run further near term and it is likely that scheduled Fed speakers over the coming week will echo a more hawkish tone,'' analysts at ANZ bank said.
''In the short term, rallies in NZD/USD are selling opportunities.''
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.
Recommended content
Editors’ Picks
EUR/USD flirts with 1.0700 post-US PMIs
EUR/USD maintains its daily gains and climbs to fresh highs near the 1.0700 mark against the backdrop of the resumption of the selling pressure in the Greenback, in the wake of weaker-than-expected flash US PMIs for the month of April.
GBP/USD surpasses 1.2400 on further Dollar selling
Persistent bearish tone in the US Dollar lends support to the broad risk complex and bolsters the recovery in GBP/USD, which manages well to rise to fresh highs north of 1.2400 the figure post-US PMIs.
Gold trims losses on disappointing US PMIs
Gold (XAU/USD) reclaims part of the ground lost and pares initial losses on the back of further weakness in the Greenback following disheartening US PMIs prints.
Here’s why Ondo price hit new ATH amid bearish market outlook Premium
Ondo price shows no signs of slowing down after setting up an all-time high (ATH) at $1.05 on March 31. This development is likely to be followed by a correction and ATH but not necessarily in that order.
Germany’s economic come back
Germany is the sick man of Europe no more. Thanks to its service sector, it now appears that it will exit recession, and the economic future could be bright. The PMI data for April surprised on the upside for Germany, led by the service sector.