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NZD/USD bulls take a bite out of both sides of the fundamentals

  • NZD/USD stuck in a sideways range for the week.
  • Eyes stay on US yields, the Fed and the US dollar in decline. 

At the time of writing, NZD/USD is trading at 0.7051 having travelled between a low of 0.7045 and a high of 0.7058, flat on the day so far and back to where the pair was at the start of the week. 

The story of the day overnight stayed with the US Treasury yields once again that were pressured due poor data to the ongoing dovish comments from Federal Reserve Chair Jerome Powell and

Initial claims for the week ended 3 April ticked higher to 744k vs 728k. The data also showed that initial claims for pandemic unemployment support, offered to people who are not typically eligible for jobs support, rose to 152k vs 237k the prior week. 

The worse-than-expected initial jobless claims highlighted the economy's bumpy recovery from the pandemic.

''In the same reporting week last year, initial claims hit a pandemic high of over 6 million. Continuing claims were 3.7m compared with a pandemic high last May of over 23m,'' analysts at ANZ Bank explained.

''The data indicate the remarkable recovery in economic activity owing to the huge stimulus from both government and the Fed.

However, the initial claims data also underline that the labour market still has a long way to go to be fully healed. Prior to the pandemic, they were hovering just above 200k.''

The combo of Powell and the data hurt both yields and the US dollar which ended down 0.37% by the closing bell as measured by the DXY.  

In afternoon New York trading, the US 10-year Treasury yield was down at 1.6210% from 1.654% on Wednesday.

Kiwi bulls benefit either way

Meanwhile, the analysts at ANZ argued that stronger US growth should benefit all global cyclical assets, including the NZD and Asian currencies, and this appears to be the theme now at play.

''The local economic picture is good (higher commodity prices, trans-Tasman bubble). Even if it is not exceptional, it should support the NZD more than others during a cyclical risk uplift.''


 

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