NZD outperforms and punches back through 0.70

Key Movers

The momentum behind the USD has faded, with the world’s base currency giving up ground to all major counterparts, excluding the yen. A string of commentary from Key Fed officials leaned away from previous hawkish rhetoric and toward a more centrist outlook, suggesting interest rate hikes as “Still quite a ways off” and that the timetable to taper asset purchase will not begin until later this year or early 2022. The comments helped moderate market expectations and, in some sense, ensure price action regains a sense of lucidity. With US treasury rates range bound, we expect the USD will continue to give up last week's gain. The euro extended its recovery toward 1.1950 and sterling punched back through 1.39 to mark intraday highs at 1.3961. Our attentions now turn to a slew of PMI data, a key marker in assessing possible ongoing inflation pressures. We are keenly attuned to changes in input costs. We expect a tentative return to risk assets and a sustained USD correction, yet acknowledge the market remains on edge and there are definite short-term risks that could prompt another risk off rally.