New Zealand dollar rally continues

The New Zealand dollar has kicked off the trading week with considerable gains. Currently, NZD/USD is trading at 0.7328, up o.46% on the day.

New Zealand dollar continues hot streak

NZD/USD posted sharp gains of 1.02 per cent on Friday, its highest one-day gain since early January. The kiwi took advantage of a drop in US yields as it rallied strongly. The currency has added to these gains on Monday, after S&P Global Ratings raised New Zealand’s sovereign rating to AA+ from AA. This upgrade is impressive, with S&P noting that it was the first rise in ratings it had given any country since Covid-19. The S&P note stated that New Zealand had recovered more quickly than other developed economies because it had done a better job of containing Covid. Still, S&P did mention two areas of concern in the New Zealand economy – a possible weakening of the housing market and high household debt. The rating upgrade has boosted the New Zealand dollar and is also good news for the RBNZ, which will allow it to attract new international investors as it continues to purchase government bonds.

New Zealand will release retail sales report for Q4 of 2020 later in the day (21:45 GMT). The third-quarter saw headline retail sales jump 28.0%, although this followed a decline of -14.6% in Q2. After these huge swings, the street consensus for Q4 is for a small decline of -0.5%. Core retail sales, which showed similar numbers as the headline read in Q2 and Q3, is expected in at -0.6%. If the estimates are accurate and the retail sales reports show declines, the New Zealand dollar’s rally could take a pause.

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NZD/USD Technical

• NZD/USD is putting pressure on resistance at 0.7355. This is followed by resistance at 0.7414
• There is support at 0.7198. Below, we find support at 0.7100
• The 50-day moving average (MA) is situated at 0.7182

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