NZD/USD defends biggest daily jump in six weeks around 0.7000

  • NZD/USD seesaws around two-week high after rallying the most since mid-July.
  • Hurricane Ida, Sino-American tussles and pessimism over NZ virus conditions challenge bulls.
  • Fed Chair Powell propelled equities, commodities and Antipodeans with measured view on tapering.
  • Light calendar keeps qualitative catalysts on the driver’s seat.

NZD/USD flirts with the 0.7000 round figure, after rising the most in multiple days to the two-week high, amid the initial Asian session on Monday. The kiwi pair keeps Fed Chair Jerome Powell led gains but finds multiple headwinds towards the north.

Fed Chair Powell buoyed global market sentiment on Friday, despite signaling taper this year. The reason could be linked to the central banker’s refrain from offering any exact timing and indicating a gap between the taper and rate hike. Also, comments like “We will be carefully assessing incoming data and the evolving risks,” offered extra confirmation to the markets that the easy money policy is here to stay, at least for now.

Following the key event, market sentiment buoyed and the US Dollar Index (DXY) dropped to a two-week low, helping equities, commodities and NZD/USD prices.

However, a lack of clarity over New Zealand’s covid conditions joins other challenges to the risk appetite while restricting the short-term NZD/USD moves.

New Zealand government signaled an easing of national alert level 04 to level 03 with Auckland keeping the highest virus-led activity restriction level of 04. The authorities are up for conveying the future lockdown deadline today but have already signaled a two-week delay in shifting the gears. On this line, NZ Herald quotes Associate Health Minister Ayesha Verrall saying, “There are "positive signs" in the Covid outbreak response but ‘mystery cases’ still pose a challenge.” The diplomat further added to his reply to TVNZ that it was good to see only a slight rise in cases in successive days – 82 on Saturday and 83 on Sunday. About half of yesterday's 83 new cases were all household contacts. "All of those are positive signs that level four is working."

Elsewhere, hurricane Ida roils energy output and challenges the global risk appetite whereas US President Joe Biden’s comments that Chinese officials worked to prevent investigators from assessing covid origins join the line as well.

Also read: RBNZ: Policy rate changes takes time to move mortgage rates

Amid these plays, S&P 500 Futures print 0.10% intraday gains after the Wall Street benchmarks pleased bulls the previous day, which in turn portrays the market’s cautious optimism and restricts NZD/USD moves.

Given the lack of major data/events, the kiwi pair is likely to remain range-bound amid mixed catalysts. However, US traders’ reaction to Friday’s key event and second-tier data, like Pending Home Sales for July and Dallas Fed Manufacturing Business Index for August, will be important. Above all, NZD/USD traders may wait for this week’s US NFP to clarify the Fed tapering clues.

Technical analysis

NZD/USD battles the key resistance line from May 26 around the 0.7000 threshold on its way up to the monthly high near 0.7090.

Additional important levels

Overview
Today last price 0.7009
Today Daily Change -0.0003
Today Daily Change % -0.04%
Today daily open 0.7012

 

About the Author

You may also like these