NZD/USD TURNS SOUTH AFTER FOMC MINUTES

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  • NZD/USD failed to consolidate above the 100-day SMA at 0.6190 and retreated towards the 0.6180 zone.
  • FOMC minutes revealed that some members wanted to hike by 25 bps in the last meeting.
  • The USD gained interest on the back of hawkish bets on the Fed and rising US yields.

On Wednesday, the Kiwi failed to hold gains that took the NZD/USD pair above the 100-day Simple Moving Average (SMA) and turned south towards 0.6180. Following the minutes, US Treasury yields rose, benefiting the greenback while investors eagerly await labour market data.


US yields rise after hawkish FOMC minutes. Eyes on labour market data

According to the FOMC minutes from the latest June meeting, despite anonymously agreeing to pause, some members of the Committee supported the case of hiking by 25 basis points. In that sense, driven by a tight labour market, members worried that it might fuel inflationary pressures but considered pausing to assess the effects of monetary policy on the US economy. In addition, members agreed that it would be appropriate to maintain rates in a restrictive stance.

As a reaction, the US yields rallied across the board. The 2-year yield rose to 4.95% while the 5 and 10-year bond rates to 4.24% and 3.93%, respectively. As bond yields tend to favour the local currency's value, the USD gained interest.

That being said, the focus now turns to June's crucial US labour market data. On Thursday, the ADP Research Institute will release employment figures expected to come in at 228k and decelerate from its previous 278k and the US Department of Labor Jobless Claims is expected to accelerate to 245k on a weekly basis


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