NZD/USD holds in bullish territory, awaits RBA and AUD reaction

• NZD/USD bulls firmer on bid Wall Street despite Ukraine crisis risks. 
• Eyes turn to the RBA interest rate decision, kiwi rides coattails of AUD.

NZD/USD is starting out in Asia around 0.6950 after climbing from the 0.6920s in New York trade when it scored a high of 0.6969 despite a firmer US dollar in general. US stocks managed to close higher on Monday, propelled by technology shares, and in turn supported high beta currencies such as the antipodeans. 

Nevertheless, the US dollar was robust at the start of the week, with the DXY higher on Monday by some 0.5% and for three straight sessions in a row. US yields were firmer due to the narrative surrounding the Federal reserve and as civilian killings in north Ukraine keep the safe-haven appeal alive in financial markets. In turn, the US dollar climbed in tandem with the yield on the US 10-year note rising 3.3bps to 2.415% on the narrative surrounding the Federal Reserve. 

In this regard, this week will see the minutes of the last meeting when Fed officials began the process of policy normalization by lifting rates 25bp to 0.25%-0.50% at the March meeting. ''The FOMC pull no hawkish punches in its policy guidance, with Chair Powell also hinting further information about QT plans will be provided in the minutes (possibly including caps details),'' analysts at TD Securities said. ''We continue to expect an official QT announcement at the May FOMC meeting.''

Eyes on RBA

''The Kiwi is higher this morning, having been better bid since the reopen yesterday, before then riding on the coattails of the AUD rally and the generalised rebound in global risk sentiment,'' analysts at ANZ Bank explained. 

''With regard to the former, today’s RBA meeting is absolutely crucial because it has been the rise in rate hike expectations in the Aussie rates market that have helped propel the AUD higher, and that has, in turn, given the NZD a boost. No change in policy is expected, but any perceived shift away from their erstwhile very dovish tone will be latched onto, especially with Q1 CPI due before the next meeting (in May). Other than that, as noted, Kiwi is just going along with the global vibe.''