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Yellen's comments echo Fed member sentiment that hikes are on their way soon; AUD and NZD on modestly weaker path; NZD/USD ended week at lowest point in two months

Currencies
Yellen's comments echo Fed member sentiment that hikes are on their way soon; AUD and NZD on modestly weaker path; NZD/USD ended week at lowest point in two months

By Kymberly Martin

Markets were relatively orderly into the weekend.

The S&P500 closed up modestly, led by the financials sector. The CRB broad global commodity index also closed slightly higher.

The USD index traded higher from the evening, gaining an additional boost in the early hours of Saturday morning after comments from Fed Chair Yellen. She echoed the fairly consistent message from Fed members since the release of the Fed’s April Minutes i.e. hike(s) are on their way soon.

The USD index closed almost 0.6% higher on the day, at 95.50. The EUR/USD closed lower at 1.1110, its lowest levels since mid-March, aligned with its 200-day moving average.

The JPY was also weaker. It closed for the week at 110.30. The latest release of CFTC data showed that the biggest change in speculative investors positioning occurred in the JPY. JPY longs were reduced from 60k to 22k.

Early in the weekend, headlines drifted out from the G7 meeting, in Japan. Whilst currency was obviously a topic of conversation, only the usual platitudes made it into headlines. The G7 will consult closely on actions in the fx markets. Nations should also refrain from competitive devaluation.

The AUD and NZD were on a modestly weaker path on Friday evening, taking a further step down after Yellen’s comments.

The NZD/USD ended the week at 0.6700, its lowest close in two months. The 200-day moving average sits a little lower at 0.6655, likely providing some support ahead of March lows around 0.6570.

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