NZD / USD consolidating gains at 20-month highs near 0.6900

• NZD / USD rallies for the eighth day in a row to hit highs of 0.6900.
• Kiwi remains strong after RBNZ’s monetary policy decision.
• NZD / USD to consolidate between 0.70 / 0-75 – MUFG.

The New Zealand dollar remains unstoppable, extending its rally against the US dollar for the eighth day in a row to test prices above 0.6900 for the first time since early April 2019. The pair has lost momentum during the US session although it remains supported above 0.6875.

Kiwi ignores RBNZ’s moderate message

The NZD / USD rally has been unaffected by the modestly dovish message from the Reserve Bank of New Zealand, which reiterates its willingness to provide more monetary stimulus to the economy to meet its employment and inflation targets.

The RBNZ has kept its benchmark interest rate unchanged at 0.25% and its Large Scale Asset Purchase Program target at NZD100 B. The biggest change has been related to the outlook for negative interest rates, which now seems less likely because of hopes for a short-term vaccine. This and the comments on the resilience of the economic data have provided new impetus to the NZD today.

NZD / USD returning to a range of 0.70 / 0.75 – MUFG

The currency analysis team at MUFG banks sees the kiwi appreciating further to consolidate above 0.70: “New Zealand’s 2-year government bond yield has risen 10 basis points due to rate expectations negatives have been reduced. The NZD / USD appears to be returning to a range of 0.7000-0.7500. We doubt this raises too much concern within the RBNZ given the optimistic outlook for 2021 and given that the NZD has been trending down for 6 years and is 12.5% ​​below the 2014 high. As long as the NZD advance is no quick, there’s a positive margin from here. ”