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Equities Weakness Further Weighs On NZD

  • The late pullback for front-end US yields this week has weighed on the greenback overall, with the USD index set to close around 0.5% lower on the week. However, mixed performance across G10 FX and the ongoing geopolitical uncertainty have contained any downside momentum for the index.
  • Weakness for equities on Friday was unable to promote any significant haven demand in currency markets, with most major pairs holding narrow ranges ahead of the weekend close. However, the moves have further weighed on the New Zealand dollar, which has declined 0.35%.
  • NZDUSD broke to fresh yearly lows this week below 0.5860 with softer than expected CPI being the catalyst. The pair continues to consolidate this weakness as we approach the weekend close.
  • Both EURUSD and USDJPY traded in tight 30-40 pip ranges on Friday, with the latter once again failing to pierce the 150.00 mark as market participants remain wary of further verbal intervention from the MOF, limiting the risk/reward for bulls, despite the attractive carry profile.
  • More notable on Friday was the strength for the Mexican peso, which recovered 0.7%, despite the risk off sentiment across major equity benchmarks.
  • Eurozone flash PMIs will kick things off next week on Tuesday before Australian CPI on Wednesday. On the central bank slate, the BOC and ECB decisions are highlights amid a number of EM central bank decisions.

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