NZD/USD: Retracement spurred by rising US bond yields to be temporary – ANZ

The kiwi hit a six-week high on Tuesday, then found itself at the mercy of a late USD DXY rebound, spurred on by rising US bond yields. Nonetheless, the overall backdrop remains positive. Milk prices rose and NZ bond yields are rising too, economists at ANZ Bank report.

Key quotes

“A steeper yield curve is generally a good sign, but it was well expected and this looks more like a positioning move/retracement rather than the start of a big USD move.”

“On the COVID-19 front, the market has shown its capacity to look through the move to Levels 2/3 locally; that seems appropriate given how well-resourced the Government is to tackle any outbreaks.” 

“Higher milk prices are a reminder of how well commodity prices are holding up.”

“Support 0.7090/0.7100 Resistance 0.7250/0.7300”