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  • NZD/USD rests at daily resistance following an impressive rally.
  • Risk sentiment flips positive into the final days before Xmas.

NZD/USD is currently trading at 0.7095 between a low of 0.7030 and 0.7104 and higher by over 0.8% in a liquidity hunt back into daily resistance.

Markets are moving fast in a holiday-shortened week this week.

Risk sentiment is being juggled between positive news on Phase-4 US stimulus and the ongoing surge in global COVID cases.

On the coronavirus front, at least four drugmakers expect their COVID-19 vaccines will be effective against the new fast-spreading variant.

Companies are performing tests that should provide confirmation in a few weeks. Ugur Sahin, chief executive of Germany’s BioNTech, which with partner Pfizer Inc, took less than a year to get a vaccine approved, said on Tuesday he expects its messenger RNA (mRNA) vaccine to still work well.

High beta currencies, such as the New Zealand dollar, have enjoyed a risk-on tone. Traders remain optimistic on the domestic front also.

Last week, the third-quarter growth inched above zero (+0.4%) in the year-on-year gauge with a strong 14.0% quarter-on-quarter, suggesting a fast economic recovery and limited impact of new restrictive measures in the third quarter.

This has the market presuming that the Reserve Bank of New Zealand will not cut rates in the next year.

Another factor underpinning the bird came in the Finance Minister Grant Robertson’s recent comment on the currency that pointed to a relaxed stance on the recent appreciation.

However, the currency remains the only overbought commodity currency in the G10 (net longs vs USD were at 17% of open interest as of last week, according to CFTC data), so some position-squaring may get in the way of further gains over the final days of the year.