Kiwi tests highs 0.72 as risk on move extends into new week.

Daily Currency Update

NZD - New Zealand DollarThe New Zealand dollar trended higher through trade on Monday, buoyed by sustained US dollar weakness. With little headline macroeconomic data and no central bank commentary to drive direction investors looked to consolidate recent gains and extend last weeks risk on shift. Momentum remains firmly behind the NZD despite an uncertain economic outlook. Global COVID 19 case numbers reached record highs Monday as India and Brazil struggle to contain resurgent outbreaks. With concerns around the efficacy of vaccines against emerging variants growing the timeline to recovery is stubbornly clouded. However, with central banks committed to maintaining accommodative monetary policy programs through the end of the crisis, markets and investors appear content in marking time, maintaining a narrow trading band ahead of a broader shift in direction and demand. The pace of appreciation slowed Monday as US treasury yields bounced of Friday’s low. We expect the NZD will continue to meet resistance on moves approaching 0.72/0.7220 in the absence of a new catalyst to spur an increased demand for risk, although sustained USD weakness could help the kiwi test said levels sooner rather than later. Despite the clouded economic outlook we still expect the NZD will maintain momentum with risks skewed to the upside into the end of the year.