- NZD/USD bulls step in as the greenback gives back some ground in a mid-session rally on Wall Street.
- Higher beta currencies get a brief boost despite the growing concerns of the coronavirus spread.
NZD/USD is moving back in on the 0.6920 psychological level as the US dollar slides back into bearish territory across the board.
At the time of writing, NZD/USD is trading at 0.6916 and has travelled between a low of 0.6878 and a high of 0.6924 having made a new high for the year as we went to press yesterday.
Price action has picked up with the move in the greenback, supporting the higher beta currencies which have tracked a mid-session rally in US stocks on the news that Schumer says McConnell has agreed to resume negotiations over Covid-19 stimulus.
‘The souring in risk sentiment should keep broader FX markets in check,” analysts at TD securities.
”We note that established ranges remain intact. Meanwhile, relative to mobility trends, we think the USD should be trading on a slightly firmer footing.
As Covid cases surge and restrictions tighten, the near-term growth outlook worsens. We remain mildly defensive and favor selective USD longs.”
Meanwhile, with additional fiscal relief on and off the congressional back burner, investors are also looking to the US Federal Reserve for signs it could step in with more monetary stimulus as record coronavirus infection numbers are thwarting the world’s economy’s recovery.
”We remain in the grip of the ebb and flow of global sentiment,” analysts at ANZ Bank explained.
”2021 is going to be pretty tough even with a vaccine (presuming it becomes available later in the year), with more layoffs likely in the US and Europe (some businesses won’t be able to hang on that long), which speaks to more policy action there,” the analysts at ANZ Bank explained.
‘With light now at the end of the tunnel, NZ’s better near-term prospects, and fading market expectations on negative rates, the path of least resistance for the NZD remains higher.”
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