25 Jun 2013
Flash: NZD/USD faces headwinds following US outlook – BNZ
FXstreet.com (New York) - Investors checked some of their recent enthusiasm for the greenback overnight – a mild pullback in US bond yields and the USD helped lift the NZD/USD from 0.7700 to around 0.7770, notes Mike Jones, an analyst at BNZ.
In particular, nervousness about the Chinese liquidity squeeze thumped Asian equity markets yesterday. The Shanghai Composite index suffered its biggest one-day decline in three years (5.3%). However, the negative tone eased through the offshore session as solid US and European economic data assuaged fears of a global slump. Recovering risk appetite, alongside a stutter in the USD’s recent uptrend paved the way for a small recovery in the NZD/USD.
The USD may have overreacted to last week’s confirmation the US Fed is set to taper down asset purchases this year. However, “the fact that US policy easing is set to be wound up a little earlier than expected is still a clear positive for US bond yields and the USD. For the NZD/USD, the brightening US outlook means the peak appears to be behind us.” Jones adds.
In particular, nervousness about the Chinese liquidity squeeze thumped Asian equity markets yesterday. The Shanghai Composite index suffered its biggest one-day decline in three years (5.3%). However, the negative tone eased through the offshore session as solid US and European economic data assuaged fears of a global slump. Recovering risk appetite, alongside a stutter in the USD’s recent uptrend paved the way for a small recovery in the NZD/USD.
The USD may have overreacted to last week’s confirmation the US Fed is set to taper down asset purchases this year. However, “the fact that US policy easing is set to be wound up a little earlier than expected is still a clear positive for US bond yields and the USD. For the NZD/USD, the brightening US outlook means the peak appears to be behind us.” Jones adds.