NZDUSD flirts with daily low, around 0.6120 area amid notable USD demand – by hareshmenghani NZDUSD Coronavirus Fed RBNZ Currencies
bove the 0.6200 mark touched on Friday. The pair remains depressed through the early part of the European session and is currently flirting with the daily low, around the 0.6120 region.
The US Dollar builds on last week's recovery from its lowest level since August 12 and gains traction for the third successive day, which, in turn, is seen weighing on the NZDUSD pair. The better-than-expected US Retail Sales released on Thursday cast doubts on the peak inflation narrative. Furthermore, hawkish signals from severalofficials suggest that the US central bank is still far from pausing its policy-tightening cycle and continues to act as a tailwind for the buck.
Apart from this, a generally weaker tone around the equity markets provides an additional lift to the safe-haven greenback and drives flows away from the risk-sensitive Kiwi. The market sentiment remains fragile amid worries about headwinds stemming from a new COVID-19 outbreak in China and the imposition of economically-disruptive lockdowns. Apart from this, fears of a potential escalation in the Russia-Ukraine conflict temper investors' appetite for perceived riskier assets.
The fundamental backdrop favours the USD bulls and supports prospects for additional intraday losses for the NZDUSD pair. Traders, however, might prefer to move to the sidelines ahead of this week's key event risks. The Reserve Bank of New Zealand is scheduled to announce its policy decision on Wednesday, which will be followed by the release of the FOMC meeting minutes. This, in turn, warrants some caution for aggressive bearish traders and positioning for a further depreciating move.
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