NZD pushes back on move toward 0.67 as risk appetite improves

Daily Currency Update

The New Zealand dollar rallied through trade on Tuesday bouncing off 0.67 through the latter stages of the domestic session and rising steadily overnight. A shift in sentiment helped fuel demand for the NZD, prompting a break above key resistance handles at 0.6760/62 and an extension toward intraday highs at 0.6770. With little of note on the macroeconomic ticket market focus shifted away from near-term Omicron headwinds as analysts instead bet the latest COVID-19 mutation will not severely impact the global economic recovery. While we are still awaiting firm scientific evidence this new variant is less virulent, anecdotal reports continue to support this thesis, helping ease concern and stave off a significant risk off shift. We expect the NZD will continue to trade between supports at 0.67 and resistance on moves above 0.68 and approaching 0.6850 through the coming days as liquidity dries up and markets look to Christmas and the New Year. Risks to this outlook remain the evolving Omicron impact. A worst-case scenario and complete risk sell-off will see the NZD test new lows. Having tested 0.67 across the last two days, a break below this level could signal an extended downturn toward 0.66.