New Zealand dollar pushes above 70

The New Zealand dollar is up sharply on Tuesday. NZD/USD is currently trading at 0.7037, up 0.59% on the day.

ANZ Business Confidence slides

New Zealand released ANZ Business Confidence on Monday and the slide continued for the index, which has now mustered only one gain in six months. The August reading came in at -14.2, down sharply from -3.8 in July. Business sentiment took a nosedive in August as the government imposed a countrywide lockdown in response to an upsurge in Covid cases.

Despite the gloomy business confidence release, the kiwi went on a surge, as investors appeared more interested in the fact that Covid cases are on the decrease. The government has announced that lockdown restrictions will be reduced outside of Auckland, and if Covid numbers continue to fall, the New Zealand dollar has upside potential, with hopes rising that the economy will be able to reopen and that the RBNZ can move forward with a rate hike.

The next key date for investors to circle on their calendars is September 22, when the Fed holds its next policy meeting. Fed officials have been hinting that a timeline for tapering could be announced at that time. However, the timing of a rate hike is less clear. Powell’s Jackson Hole speech reminded the market that there was no link between tapering and a rate hike. Still, it seems a safe bet that the announcement of a taper would trigger widespread speculation about a rate hike and would be a bullish event for the US dollar.

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NZD/USD Technical

• There is resistance at 0.7080 and 0.7147
• On the downside, there is support at 0.6884. Below, there is support at 0.6755

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