• NZD/USD bulls tiring as bears move in at the highs.
• Kiwi is under pressure despite the flows from overnight and positive news from China for commodities.

NZD/USD is down by some 0.27% and has fallen from a high of 0.6257 to a low of 0.6238, giving back some of the gains made midweek following the data that showed a revival in Chinese demand that bolstered commodity prices.

This followed a poor result in the Australian data whereby 4 Gross Domestic Product growth slowed to 0.5% QoQ in Australia, versus 0.7% previously, and consensus expectations of a 0.8% lift.  The data raised the risk of an earlier pause in hikes from the Reserve Bank of Australia which initially weighed o both currencies. 

However, the kiwi then benefited from a bout of speculative buying after the China Non-manufacturing activity grew at a faster pace in February, while the Caixin/S&P Global manufacturing PMI reading for last month likewise surpassed. The offshore yuan jumped 1.3% to 6.8683 per dollar, set for its largest one-day gain since late November.

The Kiwi also outperformed most peers and had done well on crosses, most notably NZD/AUD, analysts at ANZ Bank noted. ''EUR was a strong performer after the strong German CPI print, and the Kiwi went with it, potentially exacerbated by NZD/AUD stop-loss buying, as there wasn’t a clear NZD catalyst. That may see price action tame in the coming days.

The USD vibe is also changing. Strong data last week saw the DXY rally hard as bond yields there rose, but last night’s run of solid data has weighed on the dollar in a “good news is bad news” sort of way, likely on fears the Fed will engineer a recession. Is NZD's strength belated recognition of economic resilience and cyclone rebuilding? Has done well.''