NZD/USD erases early losses, edges higher toward 0.7100

• NZD/USD is pushing higher in the second half of the day.
• Renewed USD weakness is helping NZD/USD gain traction.
• US stocks post strong gains on vaccine news, stimulus optimism.

After sliding to a fresh daily low of 0.7059 during the European trading hours, the NZD/USD turned north in the second half of the day and was last seen gaining 0.12% at 0.7085.

DXY loses traction as US stocks climb higher

With risk flows retaking control of financial markets during the American session, the greenback came under renewed bearish pressure and allowed NZD/USD to stage a rebound. At the moment, the US Dollar Index is down 0.18% on a daily basis at 90.55 and Wall Street’s main indices are up between 0.6% and 0.9%.

Coronavirus vaccine optimism and heightened hopes for a US stimulus deal seem to have caused a positive shift in risk sentiment. Ahead of Thursday’s Advisory Committee meeting, the US Food and Drug Administration (FDA) said they have not identified any specific safety concerns with Moderna’s coronavirus vaccine. Meanwhile, reports from the US revealed that House Speaker Nancy Pelosi invited top congressional leaders to discuss the coronavirus relief bill later in the day. 

In the early Asian session on Wednesday, Statistics New Zealand will release the third-quarter Current Account report. Earlier in the day, the biweekly Global Dairy Trade (GDT) auction yielded a 1.3% increase in the GDT Price Index but was largely ignored by the market participants.

Technical levels to watch for