No rate change from the New Zealand central bank. This together with the belief that there would be no negative rates rallied NZDUSD strongly higher. Kiwi dollar has been the strongest currency among the majors today and the strong sentiment has dragged the AUDUSD higher also. RBNZ promised to provide more monetary stimulus and launches a funding program for lending in December. The bank promised also to maintain its large scale asset purchasing program at 100 billion NZD. By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.

NZDUSD is approaching a key resistance level at 0.6938. This is a weekly high from March 2019 and has been a tough challenge for the pair also before. NZDUSD rallied to the 0.6938 resistance in January 2019 and December 2018 but wasn’t able to move above the level in any of these attempts. Even though we obviously don’t know if the pair will be able to break the resistance on this attempt it’s safe to assume that the 0.6938 resistance is an important psychological level and likely to cause profit-taking.  In fact, the pair is already losing some momentum as it’s trading 0.6891 at the time of writing. Therefore those planning on going long on this pair should consider the possibility of profit-taking as the market nears to the 0.6938 resistance level. Key support levels are: 0.6838, 0.6802 and 0.6760. These levels coincide roughly with 23.6%, 38.2% and 50% Fibonacci retracement levels respectively. We are looking for buy signals if there is a retracement to the 23.6% retracement level. With the positive news (no negative rates expected) and the market in an uptrend, we expect to see buyers emerging should the market retrace to the above-mentioned support. For more analysis on this and many other markets, you may want to subscribe to TIOmarkets YouTube channel

While the world has been enthusiastic about the Pfizer coronavirus vaccine tests and Dr. Fauci suggests that the vaccination could get FDA Emergency Use Authorization by the end of the month there are major logistical challenges in administering the vaccine globally. This is made even trickier by the fact that the vaccine Pfizer has developed needs to be stored in -80 C degrees and has to be administered in two doses two to three weeks apart. This, however, hasn’t stopped the markets from buying stocks that stand to benefit from the vaccine. Stocks such as LYFT Inc. (LYFT) and Disney (DIS) which closed yesterday 19% and 11.6% higher than on Friday respectively. At the same time companies that have benefited enormously from the covid-19 related lockdowns, e.g. Amazon (AMZN) have been sold over the last few days.

Recent macroeconomic data releases

  • Canadian Trade Balance, -3.3B, -2.2B expected
  • US ISM Services PMI, 56.6, 57.4 expected
  • UK Asset Purchase Facility 875B, 845B expected
  • MPC Asset Purchase Facility Votes 9-0-0, 9-0-0 expected
  • MPC Official Bank Rate Votes 0-0-9, 0-0-9 expected
  • Official Bank Rate 0.10%, 0.10% expected
  • Unemployment Claims 751K, 740K expected
  • Federal Funds Rate <0.25%, <0.25% expected
  • Canadian Employment Change 83.6K, 59.0K expected
  • Canadian Unemployment Rate 8.9%, 9.0% expected
  • US Average Hourly Earnings 0.1%, 0.2% expected
  • US Non-Farm Employment Change 638K, 595K expected
  • US Unemployment Rate 6.9%, 7.7% expected

Macroeconomic data releases today

  • New Zealand Official Cash Rate 0.25%, 0.25 expected
  • RBNZ Monetary Policy Statement
  • RBNZ Press Conference

You may access the times and dates in the economic calendar here.

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Janne Muta
Chief Market Analyst

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