- NZD/USD jumps over 0.3% in Asia to test a crucial SMA hurdle.
- NZIER expects a V-shaped recovery in household spending.
- The think tank says the Kiwi is attractive.
The NZD/USD pair is challenging key hurdle on Monday with the NZ Institute of Economic Research (NZIER) egging the Kiwi bulls to drive faster appreciation in New Zealand’s currency.
The pair tested the 10-day simple moving average of 0.6695 a few minutes before press time and is currently trading near 0.6689, representing a 0.37% gain on the day. The SMA has capped the upside multiple times since Sept. 8.
NZD remains attractive
The NZIER’s report released early Monday said New Zealand’s relative success in containing COVID-19 and the Reserve Bank of New Zealand’s relatively less dovish stance makes the New Zealand dollar attractive.
The central bank revised the current fiscal year’s growth outlook higher, as the massive fiscal and monetary stimulus is supporting demand. “Household spending is also expected to have a V-shaped growth profile, with a sharp rebound in spending expected from 2021,” the report said.
NZIER’s upbeat comments on the economy and the exchange rate could be powering gains in the NZD. Also, the risk-on, as suggested by the 1% gain in the S&P 500 futures, could be drawing bids for the NZD and other high beta currencies.
A break above the 10-day SMA hurdle may invite more substantial chart-driven buying. On the downside, the Sept. 9 low of 0.6601 is the level to defend for the bulls.
Technical levels
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