Clears 20-day EMA Resistance, As Dollar Falters On Lower Yields

NZD/USD finished the Thursday session up nearly 0.60%, just shy of the best G10 performers, as the USD experienced broad losses in US trade. The BBDXY fell 0.74% as softer US yields post the FOMC weighed on sentiment. NZD/USD tracks around 0.5960 in early Friday dealings, just shy of late US Thursday highs near 0.5970.

• NZD/USD is now clear of the 20-day EMA, just above 0.5950. Late April highs rest at 0.5985, while the 50-day EMA is close to 0.6000. On the downside, May 1 lows were at 0.5875.
• Broader USD sentiment faltered as US yields fell across the curve. Weakness was more evident at the front end (2yr off nearly 9bps to 4.87%). We did see stronger unit labor cost data but that was largely ignored by the market, with the dovish lean from the Fed the more dominant driver of sentiment.
• US equity gains were firm (SPX +0.91%), which likely aided risk appetite for the NZD, although it didn't outperform the yen. NZD/JPY sits near 91.60 in early Friday dealings. In the past month dips in the cross sub 91.00 have been supported. Recent highs rest above 95.00.
• The local data calendar is quiet today. Earlier we had headlines from NZ Treasury cross, which stated weaker productivity growth is likely to persist (see this BBG link).
• Note in the option expiry space we have the following for NY cut later: $0.5950(N$780mln).