- NZD/USD has seen a choppy session, swinging between the 0.7240 and 0.7190 levels and currently trading around 0.7220.
- The pair has largely traded as a function of USD dynamics amid a lack of domestic New Zealand fundamentals.
It’s been a choppy day for the NZD/USD, with the pair hitting highs at 0.7240 early on during the European session to then slump to session lows under 0.7190 in the early US session. As of right now, the pair has recovered back into positive territory and currently trades close to the 0.7220 mark, up about 20 pips or just over 0.3% on the session.
Kiwi conforms to dollar flows
Amid a lack of any notable fundamentals developments out of New Zealand this week, the Kiwi has predominantly traded as a function of US dollar dynamics and on Thursday is up as a function of weakness in the buck. US bond yields have been choppy on Thursday, but at the moment are flat with the 10-year yield around 1.527% – unlike in past session, US bond market volatility has not held that much sway over dollar price action.
Instead, it seems as though the US buck has been trading as a function of risk appetite, which, given markets are in a very much risk-on mood, has weighed heavily on the safe-haven dollar; markets seem to be drawing optimism from US fiscal stimulus news; US President Joe Biden is to sign his $1.9T stimulus package into law on Thursday and there is lots of chatter about his multi-trillion-dollar infrastructure-focused stimulus package which is slated to be coming in the next few months. Meanwhile, strong US weekly labour market numbers also seem to have helped the improved risk tone.
Unsurprisingly, risk-sensitive currencies such as NZD have been gaining in tandem with equities and commodities and the kiwi (as well as the Aussie) are perhaps also deriving some support amid hopes that next week’s US/China meeting might result in some de-escalation of current tensions.
For reference; top US and Chinese officials will be meeting for a two-day summit starting on the 18th of March (next Thursday), marking the first meeting between senior officials of each country since the Biden administration took office in January. The meeting will set the tone for US/China relations for the Biden administration’s first four years.
Looking ahead, New Zealand Business PMI for the month of February is slated for release at 21:30GMT and could draw some attention. Consensus expectations are for a drop back to 49.8 from 57.5, reflecting some of the disruptions caused by two snap-lockdowns that occurred in the country last month.
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