NZD/USD declines to over three-week low, around mid-0.6800s amid modest USD strength

 

• NZD/USD witnessed selling for the third straight day and retreated further from the YTD high.
• The Fed’s hawkish outlook, elevated US bond yields underpinned the USD and exerted pressure.
• A positive risk tone might cap the safe-haven USD and limit losses for the perceived riskier kiwi.

The NZD/USD pair continued losing ground through the mid-European session and dropped to over a three-week low, around mid-0.6800s in the last hour.

The pair prolonged this week's sharp retracement slide from the 0.7035 region, or the highest level since November 2021 and witnessed some follow-through selling for the third successive day on Friday. The downward trajectory was exclusively sponsored by the blowout US dollar rally, bolstered by the Fed's hawkish outlook.

In fact, the March 15-16 FOMC minutes released on Wednesday showed that policymakers were prepared to hike interest rates by 50 bps at upcoming meetings. Moreover, there was a general agreement about reducing the Fed's massive near $9 trillion balance sheet at a maximum pace of $95 billion per month to tighten financial conditions.

After falling to 1970 precious metal Gold has shown signs of recovering back to around 2009, closing yesterday's session around 1996.After falling to 1970 precious metal Gold has shown signs of recovering back to around 2009, closing yesterday's session around 1996.

 📕 Comment on Gold on 11/03/2022:

 - After falling to 1970 precious metal Gold has shown signs of recovering back to around 2009, closing yesterday's session around 1996. This shows that the downward pressure of Gold shows signs of slowing down.  In addition to the current developments and news, there is still no sign of any signs of the war cooling down, de-escalating as the Russian army continues to move towards the capital Kyiv and open more.  attacks on major cities of Ukraine.  In my personal opinion, the possibility of Gold will still be pushed up in today's trading session.

 - On the h4 time frame we can see the closest support for this precious metal is around the 1973-1982 range.  Here, investors can establish a buy position with a safe target around the 2008-2015 threshold.

Russian rouble falls to record lows after ratings downgrades

The Russian rouble slid further on Thursday, hitting record lows against the dollar and euro, after ratings agencies Fitch and Moody's (NYSE:MCO) downgraded Russia's sovereign debt to "junk" status citing the impact of Western sanctions.

At 0830 GMT, the rouble was more than 10% weaker against the dollar at 117.5 and had lost over 7% against the euro to trade at 124.1 on the Moscow Exchange, marking the first time the rouble has traded above 110 to the dollar in Moscow.

The Russian central bank imposed a 30% commission on foreign currency purchases by individuals on currency exchanges - a move brokers said appeared designed to curb demand for dollars - but that did little to halt the rouble's slide.

Russia's financial markets have been thrown into turmoil by sanctions imposed over its invasion of Ukraine, the biggest attack on a European state since World War Two.

Russia calls its actions in Ukraine a "special operation" that it says is not designed to occupy territory but to destroy its southern neighbour's military capabilities and capture what it regards as dangerous nationalists.

Since Russian troops entered Ukraine on Feb. 24 the rouble is down close to 30% against the dollar, and analysts said on Thursday it would probably remain highly volatile. The government has ordered Russian exporters to convert 80% of their forex revenues into roubles to support the local currency, but people are still queuing up at banks to buy dollars as the rouble slumps.

Trading on the Moscow Exchange's stock section remained largely closed on Thursday, a fourth day of restrictions ordered by the central bank.

Overnight, Fitch said that U.S. and European Union sanctions prohibiting any transactions with the Bank of Russia would have a "much larger impact on Russia's credit fundamentals than any previous sanctions". Moody's said the severity of the sanctions "have gone beyond Moody's initial expectations and will have material credit implications".

S&P lowered Russia's rating to sub-investment grade last week.

Russia's invasion of Ukraine and the sanctions imposed in response have led to dire warnings about the Russian economy, with the Institute of International Finance predicting a double-digit contraction in growth this year.

On Wednesday, index providers FTSE Russell and MSCI said they would remove Russian equities from all their indexes, after a top MSCI executive earlier this week called Russia's stock market "uninvestable".