NZD/USD refreshes multi-month top above 0.6900 amid risk-on markets

NZD/USD gains 0.10% intraday, to currently around 0.6915, after refreshing the highest level since March 26, 2019 during Tuesday’s Asian session. In doing so, the kiwi pair offered a knee-jerk reaction to the trade-negative comments from New Zealand’s Trade Minister Damien O'Connor. The reason could be traced from the market’s optimism backed by the coronavirus (COVID-19) vaccine news.

Vaccine optimism dominates…

New Zealand Trade Minister O’Connor conveyed worries for the recently surging New Zealand (NZD), due to the economy’s trade-oriented nature. Even so, nothing specific could be found for the kiwi dollar and hence traders concentrated on the vaccine hopes for immediate direction.

Read: NZ Trade Minister O'Connor: Strong NZD is always a concern

Not only Moderna’s 94.5% effective vaccine, as per the latest trial results but news that Johnson and Johnson also begin the late-stage trials on its two-dose vaccine favor the market’s trading sentiment off-late. It should also be noted that Pfizer-BioNtech earlier rolled out a 90% success rate for their vaccine trials and boosted hopes that the world will be able to conquer the covid.

Amid these plays, New Zealand’s NZX 50 prints mild losses while shares from Japan and Australia print gains by press time. Further, the US stock futures also struggle for a clear direction as the COVID-19 resurgence in America put brakes on the recovery plans.

Looking forward, risk catalysts will be the key amid a lack of major data/events from New Zealand. Against this backdrop, the Australia and New Zealand Banking Group (ANZ) said,

“Kiwi is higher overnight, with risk appetite surging after more positive vaccine news, which saw US equities jump to near-record highs. Vaccine deployment won’t all be plain sailing, and things will still feel pretty tough as we go into 2021 given the lags in achieving inoculation and immunity, the still raging global pandemic, and the more pressing near-term issue of how NZ copes with a summer without tourists and a reversal in the fiscal impulse, all of which we need to overcome before a vaccine becomes widely available. But for now it’s sentiment driving markets and in that environment the risk is NZD goes higher.”

Technical analysis

The early 2019 top near 0.6940/45 lures NZD/USD buyers, for now. On the contrary, the monthly support line near 0.6860 offers immediate support.