- The NZD is one of the best performing G10 currencies on Wednesday, with the NZD / USD crossing back above 0.7000 amid a weakening of the USD.
- End-of-month flows are likely to be a factor helping the NZD, as are recent suggestions for the RBNZ to include house price inflation in its inflation scope.
The NZD / USD It has recovered again north of the 0.7000 level and has reached new highs since June 2018, marking an impressive reversal from previous lows around 0.6960. The pair is currently up a little less than 40 pips on the day or a little more than 0.5%.
End-of-Month Flows, RBNZ Reduced Negative Rates Probably Helps
End-of-month flows are arguably starting a bit earlier than usual this month, given that Thursday’s Thanksgiving holiday in the U.S. makes the rest of the week a start in what Regarding the volume of the US session market on Monday, November 30.
Therefore, the price action in Wednesday’s 16:00 GMT London correction was choppy and largely seemed to work in the favor of the NZD, CAD and GBP.
However, markets are also likely to continue to absorb Tuesday’s news of the New Zealand government pitching the idea that the RBNZ would include house price inflation in its overall inflation target, amid concerns of a overheated housing market. This, of course, would have a radical interpretation of RBNZ policy given that house price inflation has been significantly higher than consumer price inflation in recent years in New Zealand and as such the Markets could continue to reduce negative rate bets (backing the NZD).
NZD / USD bulls push back to June 2018 highs
With the NZD / USD having addressed the psychological level of 0.7000, the bulls are likely to push more and more for a move higher to the June 2018 highs at just under 0.7070. Conversely, if the pair loses recent bullish momentum, significant areas of support reside near the downside; the December 2018 high is 0.6975, as well as the first quarter 2019 highs just below 0.6950; Buyers have already shown they were eager to get ahead of these levels on Wednesday, when the drop to lows around 0.6960 bought convincingly.
Weekly chart
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