NZD/USD met with some fresh supply on Thursday and was pressured by a combination of factors.
COVID-19 jitters, a modest pickup in the USD demand both contributed to the intraday selling bias.
The NZD/USD pair remained on the defensive through the early European session and was last seen hovering near the lower end of its intraday trading range, around mid-0.6900s.
The pair witnessed some selling on Thursday and eroded a part of the previous day’s goodish intraday positive move from sub-0.6900 levels – closer to the lowest level since November 2020. Investors remained worried about the potential economic fallout from the spread of the highly contagious Delta variant of the coronavirus. This, along with the emergence of some fresh US dollar buying, exerted some pressure on the NZD/USD pair.
Following the previous day’s pullback from over three-and-half-month tops, the USD was back in demand and was supported by a further move up in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond held steady near weekly tops and remained closer to the 1.30% threshold. This helped offset a generally positive tone around the equity markets, which tends to undermine the safe-haven USD.
Market participants now look forward to the highly-anticipated European Central Bank meeting, which might infuse some volatility in the markets. Apart from this, the US economic docket – featuring the second-tier releases of Initial Weekly Jobless Claims and Existing Home Sales data – might influence the USD. Traders will further take cues from the broader market risk sentiment to grab some short-term opportunities around the NZD/USD pair.