NZD Tests Key Support After Weak Terms Of Trade Outturn, USD Steadies Pre-NFP

The kiwi dollar underperformed all its G10 peers after StatsNZ released data that showed New Zealand's terms of trade contracting by 2.4% Q/Q in the three months through end-Jun, which represents the sharpest drop in almost two years. The NZD showed no immediate reaction to the release, but it gradually lost altitude as the session progressed.

• New Zealand Gov't Bonds caught a bid just after the publication of international trade statistics. Yield last trade 7.0-8.5bp lower across the curve, which contrasts with much more limited gains for U.S. Tsys and Aussie bonds.
• Selling pressure prompted NZD/USD to retest $0.6061, the pair's lowest point in two years which contained losses on Jul 13 and yesterday. The level still holds firm when this is being typed, with bears trying to force their way through there.
• USD/JPY oscillated around Y140.00 as Japanese authorities fired the expected warning shots on rapid yen depreciation. Chief Cabinet Secretary Matsuno and Finance Minister Suzuki both pledged to monitor FX moves with urgency, albeit their comments provided no surprises re: tone and contents.
• Offshore yuan garnered some strength, which was facilitated by the eighth consecutive stronger than expected fixing of the yuan reference rate. The PBOC set the mid-point of permitted USD/CNY trading band 245 pips below the expected level. The fixing bias was third-strongest on record.
• The absence of notable data releases and sparse headline flow resulted in a modest correction of Thursday's price action. The BBDXY index eased off its all-time highs printed on Thursday, while the Scandies traded on a firmer footing.
• All eyes are on U.S. NFP data, with the headline number expected to print at +298k, according to a Bloomberg survey. Apart from the jobs report, U.S. durable goods & factory orders, German trade balance & Norwegian unemployment will also cross the wires.