Dollar Pares Recent Gains, NZD/USD Up On Continued Positive Global Equity Tone

Friday G10 FX trends have been skewed against the USD in the first part of trade. NZD/USD has led gains, up nearly 0.40%, although both JPY and CHF have ticked higher as well, even with a positive regional equity backdrop.

• The BBDXY index is less than 0.10% weaker, last under 1244.00. We are comfortably up from earlier lows this week, just under 1239, but we remain in a broader downtrend going back to late July highs.
• NZD/USD is the best performer, up 0.40%, to be back above 0.6010. This has pared NZD underperformance for the week (we are now up slightly), but pre RBNZ levels remain back near 0.6085. Data showed the manufacturing PMI stayed in contraction but up from recent lows.
• AUD/USD is trailing the NZD somewhat, last near 0.6625, up 0.20%, but still the second best performer in the G10 in the past week. Comments from RBA Governor Bullock before Australian parliament today stated the board is not considering an easing in the near term. AUD/NZD sits back at 1.1020, off recent highs near 1.1060. Iron ore is continuing to soften, not following other metals higher, which is a potential AUD headwind.
• USD/JPY has fallen, last under 149.00. It is up 0.30% in yen terms for the session, but this only modestly pares weekly losses in yen. The receding of US recession risks has buoyed the global equity market backdrop.
• Regional equities are all a sea of green, but onshore China equities are only marginally higher.
• US yields are lower today, but holding close to unchanged for the week.
• Looking ahead, we have UK retail sales, while in the US, building permits and UMich sentiment data will close out the week.