NZD/USD bulls tracking down R1 0.69 pivot, spot above key fibo support

• Kiwi is robust on the session so far.
• What is driving the higher betas?
• US yields and US data in focus.
• Kiwi unable to break above the 100 hourly SMS ahead of R1 pivot at 0.69 the figure. 

Currently, NZD/USD is trading at 0.6867, down -0.16% on the day, having posted a daily high at 0.6889 and low at 0.6833. However, the Kiwi is robust, despite risk-off tones seen through the yen crosses as US / Russia headlines spark some concern in the markets today. 

There is growing emphasis on US yields, rates and the economy's performance as we draw towards the end of October and enter a crucial stage of the year for the Trump administration and the Fed, and boy, is this week going to be a busy one with key data releases for the US economy that include the Fed and nonfarm payrolls and some key 'underlines', such as today's PCE readings. 

US: Personal consumption surged in September while income continued to disappoint  - Wells Fargo

Despite an inline PCE reading today, the Fed's preferred measure of inflation, signifying that the Fed is still behind their inflation target. US 10-year yields initially rallied from 2.3920% to 2.40475 and then back to 2.3829% before falling to 2.3739% later in the session. Perhaps the market is still concerned about inflation; It’s counterintuitive, but hike rates prematurely when inflation is not going anywhere or, already in retreat, and long yields fall in anticipation of still-lower inflation to come. The DXY was robust and drifting higher from 94.64 to 94.89 before falling to current levels of 94.69. Throughout its bid, the dollar was mixed vs the majors and commodity currencies. The yen rallied but the euro and cable dropped, while the Aussie and Kiwi, especially, were firm vs the greenback. NZD/USD rallied from 0.6845 to 0.6867 and a pip shy of the hourly 100 hourly sma. 

Many hurdles this week that could see US rates pushed around significantly - ANZ

So, if it is not inflation that is forcing the dollar and keeping yields elevated, what are the top-three things affecting 10-yr yields now?

• A new Fed Chair might tolerate faster growth and faster inflation.
• The economy is picking up steam. US: Another strong quarter of growth – NAB
• Prospects for future growth are also improving. Tax reform dominates the market discussion of growth and looks increasingly likely. 

Meanwhile, the bird was initially on the backfoot at the start of this week, attributed to comments by the new NZ Finance Minister Robertson, stating that the RBNZ could potentially lower interest rates. At the same time, Friday's upbeat US Q3 GDP growth numbers were positive for the greenback. 

Next Fed chair?

WH Official: Trump expected to announce his choice for Fed chair on Thursday - Reuters

However, the speculations over the next Fed Chair being Taylor does little to support yields and could ultimately anchor the dollar and yields due to the Trump administration looking to slow the path of the Fed raising interest rates or trying to decelerate “quantitative tightening”.  Ultimately, this could lend some support to the higher beta currencies this week such Kiwi. 

Trump to select Powell as next Fed Chair, but what are the implications for the market?

Key data releases for the greenback this week:

• ADP Employment Change
• ISM Manufacturing
• FOMC Rate Decision (FOMC: No change in policy is expected - BBH) (Upper Bound) FOMC Rate Decision (Lower Bound) Initial Jobless Claims
• Change in Nonfarm payrolls Unemployment Rate
• Average hourly Earnings MoM Average Weekly hours
• ISM Non-Manufacturing

NZD/USD levels

Held up at the 100 SMA on the hourly sticks, bears look towards 0.6817 10th May 2017 low and 26th Oct low making for a double bottom on the daily chart. Meanwhile, the FXStreet Technical Confluences Indicator shows that the recent 6864 level is where the 23.6% Fibo level was located and a hold above here opens the pivot R1 at 0.6899. However, on a correction/reversal, the bulls have a lot of legwork to do to get anywhere near out of the bearish territory and only at 0.7080 and 0.7120 levels might there be any conviction in a reversal.