- NZD/USD kick-starts the trading week inside the short-term range, poking the top of late.
- Market sentiment improves on stimulus hopes, China and Evergrande news.
- NZ markets resume trading after Labour Day holiday with light calendar in the Pacific.
- Second-tier US data, risk catalysts in focus ahead of Thursday’s US Q3 GDP.
NZD/USD holds onto the immediate trading range surrounding 0.7150, following a firmer performance of Monday. That being said, the kiwi pair seesaws near 0.7160 as the markets in New Zealand (NZ) begin the week’s trading on Tuesday, after an extended weekend.
Market sentiment improved on Monday, keeping Friday’s optimism, after headlines from China and concerning Evergrande joined hopes of US stimulus. Also favoring the risk-on is the firmer equities and receding covid fears. However, the absence of NZ traders and the market’s wait for the advance US Q3 GDP, up for publishing on Thursday, probed the quote’s latest moves.
US President Joe Biden and House Speaker Nancy Pelosi remain hopeful of getting the much-awaited infrastructure spending package passed soon. The policymakers have recently been ready to trim the package size and hence the stimulus gets less criticism from Republicans.
Elsewhere, China gets a formal seat on the United Nations and the People’s Bank of China (PBOC) stays ready for further injection, recently by 190 billion yuan. Further, Evergrande announced the restart of some cities after paying the US bond coupons the last week.
At home, receding virus cases and faster vaccinations help the NZ policymakers to stay hopeful of overcoming the coronavirus-led activity restrictions. “Deputy Prime Minister Grant Robertson confirmed today officials expect Counties Manukau to hit the 90 percent first vaccination target within the week - meaning second doses across Counties Manukau and the region's two other DHBs should be complete by the end of November,” said NZ Herald.
Alternatively, fears that COVID-19 regains momentum in China and the Fed tapering remains on the table keep the NZD/USD bulls challenged ahead of the key data/events.
Amid these plays, US equities closed higher, refreshing record tops, whereas the US 10-year Treasury yields dropped 2.2 basis points (bps) by the end of Monday’s North American trading session. However, the US Dollar Index (DXY) firmed after refreshing the three-week low.
Given the NZ traders’ return, NZD/USD may witness an active day and can overcome the immediate trading range. However, the recent USD strength and a lack of fresh positives may question the bulls. It’s worth noting that the US housing data, Consumer Confidence and Richmond Manufacturing Index may also entertain the pair traders.
Technical analysis
Although NZD/USD keeps pullback from a four-month-long ascending resistance line, near 0.7225, bullish MACD signals and Friday’s Doji keeps buyers hopeful until the quote stays beyond 200-DMA level surrounding the 0.7100 threshold.
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