A combination of firming risk sentiment and a weaker USD continued to fan the NZD uptrend on Friday. After a brief pull-back to 0.8450, a late session bounce saw the NZD/USD finish the week at 0.8502. Only the AUD and NOK put in a stronger Friday performance.The NZD is in a something of a ‘sweet spot’ for currency strength at present. The USD is suffering from back-peddling Fed tapering expectations and falling bond yields. Risk appetite is surging anew (our index of such rose from 62.3% to 71.4% last week). Volatility is plunging (1-month NZD vols hit 5-month lows below 9.5% on Friday). And domestic economic indicators suggest NZ economic growth is poised to accelerate towards 4%.
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BNZ