NZD/USD holds near to daily suport, pressured by strong US dollar, homed in on 100.00 DXY

• NZD/USD holds in familiar support territory in a quiet Asian session. 
• The Fed narrative continues to keep a lid on the commodity currencies. 

At 0.6878, NZD/USD is holding in daily supportive territories and is lower by some 0.13% after sliding from a high of 0.6892 in Asian trade on Friday. The price of the US dollar has dominated the forex space this week with the Federal reserve narrative weighing in on the rest of the pack. 

NZD/USD, as a consequence, has failed to extend its April rally that made fresh highs for 2022, albeit mostly riding on the coattail of the Aussie. The dollar index, DXY, hit a fresh 99.903 cycle high in early ASIA, the best level since late May 2020 as it hunts down the 100 psychological level. The greenback was bid for the best part of Thursday as well while US stock indexes mostly rose as investors snapped up beaten-down shares. 

Meanwhile, the Fed narrative is keeping a lid on rallies in the commodity currencies. The minutes released yesterday from the Fed's March meeting underpin the worries of higher prices and reinforce the prospect that the US central bank's balance sheet reduction is imminent. On Thursday, St. Louis Fed president James Bullard amplified these risks by saying the Fed remains behind the curve despite increases in mortgage rates and government bond yields. 

The Kiwi is lower this morning amid softer commodity prices and a slightly firmer USD. Hawkish “Fedspeak” remains an upside risk for the USD. ''The implications of higher US bond yields and more hawkish “Fedspeak” (both of which should in theory be USD positive) and the implications of a possible period of sustained high commodity prices, as many in the market are calling for, given the lack of progress on peace talks in Ukraine,'' analysts at ANZ Bank explained.

''That said, commodity prices dipped again overnight, and the picture remains complicated and convoluted. A 50bp hike next week should help bolster markets’ confidence in the RBNZ, and the NZD.''