The NZD/USD has felt the pinch of broad strengthening in the USD overnight. At around 0.7875, the currency now trades just over a cent below the post-FOMC highs of yesterday morning.
A buoyant night in equity and commodity markets hasn’t been enough to rescue the NZD. The greenback has been the star performer as a string of strong US data restored faith in Fed tapering (hot on the heels of the FOMCinspired nervousness of yesterday). Surging US interest rates have taken the edge off the NZD’s interest rate differential, cooling NZD demand from yield chasers. NZ-US 3-year swap differentials slipped from 292bps to 285bps
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BNZ