At 0.6455, the NZD/USD currency pair reversed its daily loss and looked at a four-day drop going into Thursday’s European session.

The US Dollar Index (DXY) lost 0.07 per cent during the day because traders stopped buying the dollar. After all, the ECB is becoming more hawkish. The DXY doesn’t care that US Treasury yields are going up. After rising five bps the day before, 10-year Treasury yields moved around 3.04 per cent.

Given their low levels, real yields should remain an essential macro variable in 2022. Traders will think that actual rates will keep going up, either because inflation expectations will go down as growth slows or because the central bank will be more hawkish. Even if US yields go up, the US dollar will stay strong and become king when global growth is slow, and people don’t like taking risks.

The NZD/USD also increased because Chinese trade numbers were better than expected. The trade balance was +78.76B, more than the +58B expected and the +51.12B before. Details point to solid exports and imports in May.
Even though the market has stabilized, inflation and growth fears pressure the NZD/USD pair.

Conclusion

Rising crude oil prices and stagflation have made people less willing to take risks in the short term. We’re optimistic about the future. As food shortages worldwide worsen, NZ goods might become a big part of the kiwi.