NZD/USD struggles to get back above 0.7150 as wounded US dollar claws back

• NZD/USD gains have been capped by the 0.7150 level on Friday amid a minor recovery in USD.
• USD looks likely to close in the green for the first time this week, with DXY consolidating just above the 90.00 level.

NZD/USD has traded largely as a function of USD dollar flows on Friday and given a broad pick up in USD strength, has struggled to rally beyond the 0.7150 mark. The pair remains well supported above the 0.7100 level, however, and currently trades in the 0.7130s.

USD perks up

After four straight days of selling that took the Dollar Index (DXY) from starting the week just under 91.00 and hitting lows of the week in the 89.70s, the US dollar is finally finding some respite into the weekend and DXY has managed to clamber back above the 90.00 level (just).

Broadly upbeat remarks from Fed Vice Chair Richard Clarida (who is seen by many as “the brains” at the Fed, given he is the most senior member with a background in the study of economics, as opposed to Jerome Powell who is a lawyer by trade), have failed to stir much of a reaction, likely given the fact that the vast majority of market participants have already left for the weekend and not even seen his remarks. He made very little reference to near-term Covid-19 induced economic pain and instead sounded more upbeat on the longer-term outlook for 2021. Moreover, he expressed contentment with the Fed’s policy on hold as is (which might disappoint growing market expectations for action via tweaks to the bank’s QE programme in January).