• NZD/USD pressured to familiar supporting levels.
  • US Treasury yields propped by latest Fed developments.

NZD/USD is set to open steady following a comparatively quiet end to the week ahead of what is anticipated to be a slow week according to the economic calendar, domestically.

The focus has been with the US dollar that advanced against major currencies on Friday.

The bulls progressed to more than one-week high after the Federal Reserve allowed a pandemic-driven break on capital requirements lapse, pushing US Treasury yields off their lowest levels of the day.

For the year,  the dollar index, a gauge of its value against six major currencies, has improved by around 3.3%, with the benchmark US 10-year note climbing about 80 basis points in the same timeframe.

The latest development has come from the Fed announcing on Friday that it would let expire on March 31 a temporary rule directing larger banks to hold more capital against their assets, such as Treasuries.

Meanwhile, markets await a much-anticipated housing announcement which may shape views on the future path of monetary policy, and by extension, the NZD.

”Vaccination rollouts are proceeding at pace offshore (especially in the US and UK) and as these countries re-open, the risk is that their own recovery dynamics leave NZ – which already had its big bounce – behind a touch. As we noted on Friday, the NZD story is a good one; it’s just not an exceptional one,” analysts at ANZ Bank said. 

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