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  • NZD/USD stays positive near the highest since April 2019.
  • S&P 500 Futures begins the week with an upside gap over US election results.
  • NZIER shadow board defies odds of RBNZ rate cut, additional stimulus.

NZD/USD extends the week-start gap-up to 0.6800 during the initial hour of Monday’s Asian session. In addition to the broad optimism concerning the US coronavirus (COVID-19) stimulus, due to the latest election results, upbeat comments from NZIER also favor the kiwi buyers.

All eyes on the RBNZ…

In its latest update, the Shadow Board of the New Zealand Institute of Economic Research (NZIER) sees less need for further stimulus. In doing so, the independent group contrasts the latest bearish signals from the Reserve Bank of New Zealand (RBNZ). Also keeping the NZD/USD sellers hopeful is the latest rate cut and an additional Quantitative Easing (QE) from the RBA.

Further, analysts at the Australia and New Zealand Banking Group also stay dovish for the RBNZ ahead of Wednesday’s meeting. ANZ’s latest report said, “We expect the Bank to reiterate its “least regrets” approach, which comes with the prospect of further OCR cuts and a likely reiteration of possible foreign asset purchases. That may dampen enthusiasm as the week progresses.

That said, S&P 500 Futures begins the week on a front foot after Friday’s mixed performance on US election jitters. The reason could be traced from Saturday’s announcement from the Washington terming Democratic Joe Biden as the US President. However, Donald Trump’s multiple lawsuits challenging the results and the Republican hold in the Senate probe the much-awaited COVID-19 aid package and risks.

Also questioning the risk-takers are the recent increases in the European and the US covid cases that propelled global total beyond 50 million.

Given the lack of major data/events, coupled with multiple risks in the background, NZD/USD bulls should stay cautious.

Technical analysis

Unless providing a daily closing beyond 0.6800 resistance, odds of witnessing a pullback to October high near 0.6725 can’t be ruled out.