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NZD/USD direction is being mostly dictated by the USD - BNZ

FXstreet.com (Barcelona) - After trading as low as 0.8005 during Asia trade, the Kiwi was able to find support and reverse higher to finish up 69 pips at 0.8126.

According to Mike Jones, Currency Strategist at BNZ, “The NZD has been amongst the strongest performing currencies in a volatile and messy overnight trading session. After sliding to 8-month lows close to 0.8000, the NZD/USD quickly bounced back to 0.8150 where it opens this morning.”

He went on to add, “Broader NZD sentiment was also bolstered by heavy NZD/AUD demand. The slump in China’s PMI and Ford’s decision to pull out of Australia after 90 years certainly didn’t do the lucky currency any favours. Investors’ preference for the relatively brighter fundamental outlook of NZ pushed the NZD/AUD to fresh 4-year highs above 0.8360 overnight. NZ-AU interest rate differentials also increased as markets ratcheted up RBA rate cut expectations again. As a result, the ‘fair-value’ range of our short-term NZD/AUD valuation model has nudged up to 0.8100-0.8300.For today, NZ trade balance figures at 10:45am are expected to show a monthly surplus of $565m, good enough to reduce the annual deficit a bit (market expectations $515m). We doubt the trade figures will trouble the NZD though. For now, NZD/USD direction is being mostly dictated by the USD.”

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