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It was a quiet Friday night, with markets mostly stable due to a lack of new developments. Stock prices remained steady, while bond yields increased slightly. The yield on the US 10-year went up by 4bps to 4.42%.
NZDUSD has slightly increased since last Friday and was the best performing G10 currency last week, rising by nearly 2%. As long as the US equities remain strong, the NZD will be supported on any declines. However, a period of consolidation or a slight pullback seems like given the overheated equity markets last week. As per the charts, support is anticipated at the former downtrend resistance, now turned support at 0.6110 and then at 0.6065. On the upside, if the stock market stays strong or the RBNZ takes a more aggressive stance, the NZD could reach 0.6175.
NZDAUD has observed the similar trend as it broke through the February-April downtrend 2 weeks ago and has continued to rise. This week, it might consolidate as the market anticipates the upcoming announce of from the Reserve Bank of New Zealand (RBNZ). Support is expected around 0.9135 and then at 0.9100. But a test of 0.9200 could be possible this week. Despite the current negative sentiment in New Zealand, inflation remains high and therefore it is unlikely that the RBZN will indicate any rate cuts.
USDJPY rose after the Bank of Japan (BoJ) announced it would keep its bond purchase amounts unchanged. Earlier last week, a surprising cut in the bond purchases had strengthened the yen. USDJPY stopped just ahead of 156.00 and ended the day mostly unchanged.
Locally, The main event for this week is the RBNZ meeting on Wednesday at 2pm, where no change is expected from Governor Orr. Additionally, NZ Retail Sales data will be released on Thursday and Consumer Confidence data on Friday.
Internationally, the FOMC minutes will be released on Thursday night, but the Durable Goods report on Friday which could be a bit more interesting. We may also hear from Powell tonight, depending on his Covid status, along with several other Fed speakers, including Bostic, Waller, Mester and Williams, providing plenty of insights throughout the week.
Here are the latest mid-market rates:
| Currency Pair | Mid-market rate |
| NZD/USD | 0.6132 |
| NZD/AUD | 0.9162 |
| NZD/JPY | 95.50 |
| NZD/CNY | 4.4338 |
| NZD/EUR | 0.5641 |
| NZD/GBP | 0.4827 |
| NZD/HKD | 4.7840 |
| NZD/SGD | 0.8249 |
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