- NZD/USD pressured in broad dollar strength and risk-off tones.
- RBA up next today, ears will be listening out for forecasts.
NZD/USD has been attempting to recover from lost ground from the late April tops but the US dollar is back in vogue, dominating the FX matrix. At the time of writing, NZD/USD is trading at 0.6050 having travelled between a low of 0.6008 and a high of 0.6060.
The week started out with escalations over the Chinese and US trade feud as the US administration seeks to blame the COVID-19 pandemic on China’s reckless handling of their own epidemic. In response to Mike Pompeo, Secretary of State, interview and accusations on ABC News reported on here: What you need to know as markets open: Pompeo and Trump ratcheted up US and China tensions, the Global Times (GT) wrote an editorial here: Pompeo’s anti-China bluff strategy reveals all-or-nothing mentality to fool US voters – GT.
The news hit the commodity complex and created USD strength. “‘Feel-good’ vibes yesterday (zero new COVID-19 cases, an RBNZ hint that the OCR wouldn’t be cut and RBNZ funding for the BFGS via the TLF) have been shrugged off and we’ve settled into a new 0.60/0.605 range ‘on the narrow’,” analysts at ANZ Bank explained – “Kiwi has been tricky lately and this recent episode serves as a reminder that it’s a ‘risk-on’ currency,” the analysts added.
RBA next in focus
Meanwhile, for the day ahead, the Reserve Bank of Australia will take centre stage. The focus will be on the economic outlook – more on that here: RBA Preview: Markets looking for forecasts, not action