Is this the beginning of a USD repositioning?

Daily Currency Update

The New Zealand dollar capitalised on ongoing USD softness through trade on Tuesday as markets continue to position for a slower pace of Fed rate adjustments. Having tracked sideways through much of the domestic session the NZD climbed off intraday lows at US$0.5670 marking session highs north of US$0.5770 following another string of underwhelming US data points. A 2^nd consecutive monthly fall across house prices, coupled with a decline in consumer confidence and a downturn across key manufacturing indicators drove US 10 year and 2-year rates lower while driving equities and risk assets higher. The fallout from Chinese President Xi’s politburo re-shuffle continues to cast a pall over Chinese investment opportunities yet, the NZD was able to navigate through a spillover and broader CNY weakness through trade on Tuesday, a possible signal that the strong correlation between Yuan performance and the NZD may be breaking. A shift in NZD and CNY connectivity coupled with a USD downturn on the heels of a Fed pivot could open the door to a longer run NZD recovery. Our attentions now remain affixed to global rates, CNY performance and next weeks all important Federal Open Market Committee policy update.