New Zealand dollar’s bearish reversal from one-month highs above 0.6700 seen on the early US session found support at 0.6650 area and the pair picked up again to return to the 0.6680 area approaching the weekly close.
The NZD has been going through a solid rally over the last three days. The pair bounced up week lows at 0.6550, and is on track to close the week with gains beyond 1%.
Kiwi’s uptrend was halted earlier today, as the pair retreated from multi-week highs above 0.6700 with the US dollar going through a modest recovery as risk appetite faltered during the early US session. NZD, however, managed to come back later on, with the US resuming its near-term downtrend.
The US dollar has been trading on a weak footing this week with investors cautious amid the uncertainty about the US elections and mixed news coming from the US stimulus negotiations. The upbeat US PMI data seen earlier today has been practically unnoticed and the USD has lost more than 1% against a basket of the most traded currencies this week.
The Westpac FX analysis team sees the New Zealand dollar buoyed by the near-term global sentiment: “NZD/USD remains supported near-term by global sentiment, such that a test of 0.6700 during the next few days is possible (…) Global influences should dominate domestic surprises such as today’s weaker-than-expected CPI inflation data. While the data surprise supports the RBNZ’s view that much more work needs to be done to drive inflation towards target, markets have already priced a large OCR cut next year so the NZD/USD impact of today’s news is likely to be minor.”