NZD/USD bulls in charge despite risk-off themes

• The kiwi is on the front foot and eyeing a break to the 0.70 area. 
• A generalised rally in commodity prices is supporting NZD.

NZD/USD has been on firm grounds mid-week as it moves up towards 0.70 the figure. US stocks finished Wednesday's session lower, while crude oil futures rose together with gold prices. Nevertheless, the kiwi held up well.

The S&P 500 lost  1.2% to 4,456.24, the tech-heavy Nasdaq Composite was 1.3% off at 13,922.60 and the Dow Jones Industrial Average declined 1.3% to 34,358.50. The 10-year US Treasury yield fell 8 basis points to 2.30%. 

''The Kiwi held up reasonably well overnight given the breather in global risk sentiment and fall in equities. That said, commodities and the AUD have rallied, led by oil. While higher oil prices aren’t a positive for NZ, the generalised rally in commodity prices is, and the NZD seems to be able to latch on to any thread of positivity at the moment,'' analysts at ANZ Bank explained.

''We still have mixed views on how things will unfold. Our forecasts call for a mild further strength by year-end (0.70) but we also acknowledge risks of a hard landing, which is becoming a bigger talking point in markets as each day passes. Ahead of expected back-to-back 50bp OCR hikes we think NZ short end rates haven’t yet peaked; all else equal that’s likely to limit how much lower the NZD might be able to go (until the Fed catches up).''