NZD/USD: Higher short-end rates underpins the kiwi – ANZ

The kiwi continues to consolidate around 0.7070. Higher short-end rates are key support, helped by optimism that Wellington has dodged COVID-19, though it’s still too soon to be sure, strategists at ANZ Bank report.

NZD/USD remains in consolidation mode, range-trading around 0.7070

“Higher short-end rates (in turn a reflection of expectations of earlier OCR hikes) are helping support the kiwi’s rebound off-post-FOMC lows. While we expect that to continue, it’s likely to be a slow grind.”

“Wellington remains in Level 2 (which has been extended by a further 48hrs), but with no cases yet, markets are taking a glass-half-full view and it has not affected the NZD. But it isn’t over yet: the situation over the Tasman is more severe. While it doesn’t directly affect the NZD much, it could via its correlation with the AUD, and via the knock-on impact on the trans-Tasman travel bubble.”

“Support 0.6703/0.6800/0.6900 Resistance 0.7100/0.7230”