NZD/USD rallies mid-0.6500 and targets monthly highs at end of strong week

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  • NZD/USD ends a strong week positively and last traded at 0.6530, up 0.9% on the day.
  • The pair has rebounded around 5.0% from the monthly lows of two weeks ago and is targeting monthly highs in the 0.6560s.
  • US inflation data on Friday supported the idea that US inflation is easing, weighing on the dollar.

NZD/USD took center stage on Friday amid a strong end to what was, for the most part, a strong week for risk assets and global commodity markets. The pair last traded at 0.6530, up around 0.9% on the day, taking its gains for the week to around 2.0%, reflecting that the kiwi has been l one of the best performing G10 currencies this week. The pair is eyeing a test of the monthly highs at 0.6560.

US Core PCE inflation data for April has bolstered the mood in recent trading and has also weighed somewhat on the US Dollar. aggressively. But the kiwi also benefited from support from domestic New Zealand factors this week, which partly explains its outperformance against most other G10 countries other than the US dollar.

The RBNZ raised interest rates by 50 basis points to 2.0% as expected on Wednesday, but signaled a much more hawkish-than-expected path for interest rates in the quarters ahead, the bank s expecting to have raised rates to nearly 4.0% in 2023. point, the RBNZ is comfortably the most hawkish central bank in the G10 and that has helped NZD/USD rebound around 5.0% over the past few months. past two weeks from previous monthly lows in the 0.6200s.

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