The NZD/USD pair held on to its modest intraday gains through the early part of the European session and was last seen trading near daily tops, just below mid-0.6900s.
The pair managed to gain some positive traction on the first day of a new week and inched back closer to Friday's post-NFP swing highs amid a subdued US dollar price action. Apart from this, the uptick lacked any obvious catalyst and runs the risk of fizzling out rather quickly.
Despite the disappointing headline NFP print, investors still seem convinced that the Fed will begin tapering its bond purchases by the end of 2021. The markets have also been pricing in the possibility of a rate hike in 2022 amid fears of a faster-than-expected rise in inflation.
The market expectations were reinforced by the recent surge in the US Treasury bond yields, which should continue to act as a tailwind for the greenback and cap gains for the NZD/USD pair. In fact, the yield on the benchmark 10-year US government bond shot to four-month tops on Friday.
The US money markets will remain closed on Monday in observance of Columbus Day. This further makes it prudent to wait for a strong follow-through buying before placing aggressive bullish bets around the NZD/USD pair and positioning for any meaningful intraday appreciating move.
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