In response to a better NZ CPI report, the NZD/USD gained significant bullish momentum on Friday.
COVID-
For the time being, 19 anxieties have prevented any further rises for the deemed riskier kiwi.
Before the US Retail Sales figures, a subdued USD price action remained supportive.
Despite retreating a few pips from daily swing highs, the NZD/USD pair maintained its bid tone through the early European session. The pair was last seen trading near the psychological level of 0.7000, still up over 0.30 percent on the day.
On the penultimate trading day of the week, the pair found some fresh bids and recovered a large portion of the previous day’s retracement decline from over one week highs. The kiwi rose sharply in response to a stronger second-quarter consumer inflation report from New Zealand. In reality, the headline CPI outperformed market expectations, rising 1.3 percent from 0.8 percent in the previous quarter.
Furthermore, the annual rate increased from 1.5 percent to 3.3 percent, the fastest rate in nearly a decade. The report bolstered expectations for a rate hike by the Reserve Bank of New Zealand (RBNZ) at its August policy meeting, sparking a new round of short-covering activity in the NZD/USD pair. The pair’s intraday bullish momentum was supported by this, as well as a restrained US dollar demand.
Concerns over the more contagious Delta strain of the coronavirus, on the other hand, worked as a tailwind for the safe-haven USD, limiting gains for the considered riskier kiwi. A goodish rise in US Treasury bond yields and aggressive Fed views also helped the currency. This, in turn, has put any major upside for the NZD/USD pair at bay, at least for the time being.
The NZD/USD pair failed ahead of the weekly swing highs, which should now operate as a critical important mark for intraday traders, in the 0.7040-45 range. The release of US Retail Sales statistics on Friday will now be scrutinized for new impetus. Aside from that, the USD will be influenced by US bond yields and overall market risk sentiment, resulting in some trading opportunities around the NZD/USD pair./n
