NZD/USD pares intraday losses above 0.6200 as yields weigh on US Dollar ahead of US PMI

• NZD/USD picks up bids to trim the first daily loss in three.
• Mixed sentiment, light calendar in Asia-Pacific allow Kiwi bears to take a breather.
• Yields stay depressed as banking woes, Fed’s dovish hike propel demand for bonds.
• First readings of US PMI, Durable Goods Orders should be eyed to predict the one last shot of volatile week.

NZD/USD trims intraday losses around 0.6240 during early Friday morning as market sentiment dwindles during the first loss-making day in three.

The Kiwi pair’s latest rebound could be linked to the dovish concerns surrounding the Federal Reserve’s (Fed) next move, as well as the downbeat yields. That said, the Fed’s heavy lending amid the banking rout flags fears of a ballooning Fed balance sheet, which in turn renews hawkish calls for the US central bank’s next moves. However, the mixed US data and the latest Fed statement appear to challenge the policy hawks. Also challenging the US Dollar could be the comments from key market players like DoubleLine’s Gundlach who recently reiterated his dovish bias for the US central banks.

Elsewhere, comments from US Treasury Secretary Janet Yellen and the Chair of the Basel Committee on Banking Supervision, portraying the market’s fears of banking fallouts, also weigh on the market’s mood and challenge the NZD/USD buyers. However, the recent retreat in the yields keeps the pair buyers hopeful.

In this regard, the Financial Times (FT) recently mentioned said that the head of the world’s top financial regulator, Pablo Hernández de Cos, has called for tighter rules to clamp down on risks spreading from so-called “shadow banks” to other parts of the banking system. On the other hand, US Treasury Secretary Janet Yellen said on Thursday, “China and Russia may want to develop an alternative to the US dollar,” while also showing preparedness for additional deposit actions `if warranted'.

It’s worth noting that the mixed US data also challenge the NZD/USD prices. That said, the US Chicago Fed National Activity Index (CFNAI) dropped to -0.19 in February versus 0.0 expected and 0.23 prior. Further, Weekly Initial Jobless Claims declined to 191K for the week ended on March 18, versus 192K prior and 203K market forecasts. It should be noted that the US New Home Sales rose 1.1% in February from 1.8% prior, versus 1.6% analysts’ estimation, whereas Kansas Fed Manufacturing Index for March rose to 3.0 from -9.0 prior and 6.0 expected.

While portraying the mood, the US 10-year and two-year Treasury bond yields remain depressed at around 3.38% and 3.78% respectively by the press time whereas the S&P 500 Futures struggle to copy Wall Street’s positive moves.

Moving on, NZD/USD pair traders should pay attention to the market sentiment, as well as to the US Treasury bond yields, for clear directions. Also important to watch will be the first readings of the US S&P Global PMIs for March and Durable Goods Orders for February.

Also read: S&P Global PMIs Preview: EU and US figures to shed light on economic progress

Technical analysis

NZD/USD appears lackluster inside a 100-pip area between the 21-DMA and 50-DMA, respectively near 0.6200 and 0.6300.