- NZD/USD edged lower on Friday and snapped four consecutive days of the winning streak.
- A modest USD strength exerted some downward pressure on the pair amid COVID-19 jitters.
- The downside remains cushioned as investors seemed reluctant ahead of the US NFP report.
The NZD/USD pair maintained its offered tone through the early European session and was last seen hovering near the lower end of its daily trading range, just below mid-0.7000s.
The pair witnessed some selling on the last day of the week and for now, seems to have snapped four consecutive sessions of a positive move. The downtick was sponsored by a modest US dollar strength and a softer tone around the equity markets, which tends to undermine perceived riskier currencies, including the kiwi.
The USD remained supported by Fed Vice Chair Richard Clarida's hawkish comments on Wednesday, noting that conditions for an interest rate hike could be met in late 2022. Clarida further signalled a move to taper bond buying later this year or early 2022 and forced investors to bring forward the likely timing of a policy tightening.
This was evident from a strong move up in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond prolonged this week's strong positive momentum and shot back closer to monthly tops. This was seen as another factor that acted as a tailwind for the USD and exerted some pressure on the NZD/USD pair.
Apart from this, worries about the potential economic fallout from the fast-spreading Delta variant of the coronavirus further underpinned the greenback's relative safe-haven status. Given this week's rejection near the very important 200-day SMA, the fundamental backdrop favours bearish traders and supports prospects for further weakness.
Investors, however, seemed reluctant to place any aggressive USD bullish bets ahead of the US monthly jobs data. The popularly know NFP report will influence market expectations about the next policy move by the Fed. This will drive the greenback in the near term and assist investors to determine the next leg of a directional move for the NZD/USD pair.