- The NZD extends gains beyond 0.7040 to get closer to the 0.7100 area.
- Risk appetite is supporting the NZD against a weaker USD.
- NZD / USD: The breakout of 0.6980 could send the pair to 0.7400 – Westpac.
The NZD continues north for the third day in a row on Friday. The pair NZD / USD it has broken above initial highs in the 0.7030 / 40 area and is reaching levels close to 0.7100, en route to a 2.15% appreciation this week, after having lost around 4%.
NZD appreciates as market sentiment rises
The risk-sensitive kiwi has rebounded sharply in the past three days due to an increased appetite for risk. The release of better-than-expected quarterly earnings in the financials sector has sent equity markets higher, weighing on safe assets like the USD.
The US dollar index, which measures the value of the dollar against the most traded currencies, has depreciated this week for the first time since the end of August. The dollar, which had hit one-year highs earlier this week, lost momentum during the last half of the week after the US CPI confirmed persistent inflationary pressures on consumer prices, and the Fed assured that they will begin to reduce their monetary stimulus program. before the end of the year.
Also, the rally in US Treasury yields has lost steam this week. The benchmark 10-year bond yield fell from levels above 1.60% on Monday to weekly lows around 1.51% on Thursday, while short-term yields have risen to multi-month highs, thus flattening the yield curve. from USA
NZD / USD: Breakout of 0.6980 could send pair towards 0.7400– Westpac
From a technical perspective, Westpac’s currency analysis team looks at the pair just below a key level, which could accelerate the uptrend: “The NZD / USD has been within the range of 0.6860-0.6980, with few directional clues to short term. One possibility is that the downward correction from the beginning of September has been completed and a base is being formed to launch a retest of multi-week 0.7200 and 0.7400 by year-end ”.