NZD jumped to highs unseen since 2019

The New Zealand dollar is rising for the sixth straight day, outperforming its major peers. What is the reason? Let’s find out!

What happened?

The kiwi was driven up by the optimistic comments of Finance Minister Grant Robertson. He claimed that the economic recovery turned out better than initially expected, and this may tone down the dovish Reserve Bank of New Zealand. Just to remind you, the dovish statement will push the NZD down, while the hawkish statement will push the NZD up.

If you forget what these definitions mean, you can always check our glossary and refresh your mind what hawkish and dovish statements stand for.

By the way, the RBNZ will make a rate statement already on Wednesday. Therefore, the NZD will be in the center of traders’ attention in the upcoming days. However, some analysts still believe that the central bank will be forced to impose negative rates next year.

Robertson’s optimism over New Zealand’s sustained recovery was based on the upbeat GDP for the second quarter. After that, he added, that this positive data may influence the rate outlook after March 2021, because the RBNZ has to leave the current rate of 0.25% unchanged until this date.

Technical tips

NZD/USD has stepped out of the ascending channel, it has been trading for 10 days. However, it has failed to stabilize above the 200-week moving average at 0.6790. It’s falling to the low level of the first days of September at 0.6750. The move below this support will drive the pair to yesterday’s low of 0.6710.

The bearish scenario is more likely as the pair is constrained by the upper trendline and the 200-week moving average, so there is no room to run upwards. In addition, the overall market sentiment switched to risk-off, weighing on the riskier assets and underpinning safe-havens such as the US dollar. Resistance levels are 0.6790 and 0.6850.

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Kseniya Medik