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Erases Post-RBNZ Gains As US Yields Rise


NZD/USD prints at $0.5940/45, the pair fell ~0.2% yesterday.

  • After post-RBNZ gains extended early in the European session NZD/USD faced resistance ahead of the $0.60 handle, which is forming as a key level for bulls.
  • The pair erased daily gains as the USD and US Tsy Yields ticked higher in the lead up to the July FOMC minutes, which had a hawkish tilt as the Fed sees upside risks to inflation. NZD/USD printed a fresh YTD low before paring losses.
  • Technically we remain in a downtrend, bears target a break of the $0.59 handle which opens $0.5813, a Fibonacci projection. To turn the tide bulls target the $0.60 handle and the 20-Day EMA ($0.6065).
  • A short time ago RBNZ Gov. Orr appeared before parliament. He noted that the current OCR is constraining inflation and that the economy is going through a necessary slowdown. Orr expects the NZ current account deficit to narrow.
  • Cross asset wise; S&P500 fell ~0.8% and BBDXY rose ~0.2%. 10 Year US Tsy Yields were ~4bps firmer. WTI Crude Oil fell 2.2%.
  • Q2 PPI Input and Output are on the wires this morning, there is no estimate for the release.

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