NZD/USD heads into the close near daily highs ahead of US Fed gov. Powell

• NZD/USD holds in positive territory into the early Asian session.
• The kiwi has been driven higher by a fall in the greenback from the lofty bull cycle highs. 

NZD/USD is ending the day close to the highs of 0.6075 after rallying around 0.6% from a low of 0.5996, rebounding on the back of a move lower in US bond yields and firmer equities.

Despite data that has been signalling strength in the US economy, the greenback flipped over on Wednesday even though traders continue to bet on a 75-basis-point interest rate hike by the Federal Reserve later this month. Fed fund futures are implying that investors are pricing in a more than 76% chance of such a move. 

''Once again there was nothing NZ-specific about the move, and that’s the way it feels like it’s going to be for a while as global FX markets digest significant themes (restated Fed hawkishness, the far-reaching consequences of surging energy costs, debates over how sticky inflation is, and climate change – to name a few),'' analysts at ANZ Bank said in early Asia open on Thursday.

''Technically though, the textbook bounce in the NZD off 0.60 (it fell below it briefly, but it wasn’t sustained) is a positive sign for those of that ilk, and if the global market backdrop doesn’t deteriorate, it may have formed a base. But that can’t be assured, and it makes sense to brace for volatility.''

Looking ahead, the main focus will be on Fed chair Powell's speech ahead of the US Consumer Price data next week as traders for clues on the path of monetary policy. At midnight this Friday, the Fed media blackout goes into effect and there will be no speakers until Chair Powell’s post-decision press conference on September 21.