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NZD/USD retreats to fresh session lows below 0.7200

  • NZD/USD edges lower after posting modest gains on Thursday.
  • US Dollar Index rises into the positive territory above 90.00.
  • Focus shifts to UoM Consumer Sentiment Index data from US.

After managing to close in the green on Thursday, the NZD/USD pair failed to preserve its bullish momentum and started to edge lower ahead of the American session. As of writing, the pair was down 0.22% on the day at 0.7180.

DXY gains traction on recovering bond yields

On Thursday, the sharp decline seen in the US Treasury bond yields didn't allow the greenback to capitalize on the higher-than-expected Consumer Price Index (CPI) data for May. The US Dollar Index (DXY) closed in the negative territory and helped NZD/USD to cling to its daily gains.

Nevertheless, with the benchmark 10-year US T-bond yield gaining nearly 1% on Friday, the DXY is up 0.2% at 90.23. 

Earlier in the day, the data from New Zealand showed that the Business NZ PMI improved modestly to 58.6 in May from 58.4 in April. This reading came in better than analysts' estimate of 54.4 but was largely ignored by market participants.

The only data featured in the US economic docket will be the University of Michigan's last Consumer Sentiment Index for June. Meanwhile, investors will keep a close eye on the performance of US stocks. The S&P 500 remains on track to post a new all-time high after the opening bell with futures rising 0.2%. In case risk flows dominate the markets ahead of the weekend, the USD could find it difficult to gather further strength.

Technical levels to watch for

 

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