The Kiwi Dollar could pick up extra pace and attempt a test of the 0.6560 region, noted FX Strategists at UOB Group.
24-hour view: “NZD outperformed yesterday as it rocketed by +1.20% to close at 0.6511. The rally is severely over-extended and further NZD strength is not expected for today. However, it is too early to expect a significant pullback. NZD is more likely to consolidate and trade sideways at these higher levels. Expected range for today, 0.6480/0.6520.”
Next 1-3 weeks: “We expected NZD to “trade sideways for a period” since more than 2 weeks ago (see annotations in the chart below). The sidewaytrading phase ended with a huge bang as NZD rocketed and made an outsized gain of +1.20% (0.6503). On top of the impressive gains, NZD also closed at the highest level since the shock 50 bps cut by RBNZ in early August. The strong improvement in momentum suggests NZD could continue to advance towards 0.6560 in the coming weeks. Only a move below 0.6460 (‘strong support’ level) would indicate that our view is wrong.”