NZD/USD probes multi-month high above 0.7000, eyes China PMI
|- NZD/USD bulls attack 2.5-year top, prints nine-day winning streak.
- US dollar weakness, vaccine hopes favor the bulls amid New Zealand’s (NZ) victory over the covid.
- ANZ Business Confidence, Activity Outlook can offer intermediate clues ahead of China’s November month official PMIs.
NZD/USD takes bids around 0.7040 amid the early Monday morning in Asia. In addition to the broad US dollar weakness, the kiwi bulls cheer optimism concerning the coronavirus (COVID-19) vaccine while probing the highest levels since mid-2018. Even so, the bulls remain cautious ahead of the key data.
Vaccine-led optimism offers extra boost to the bulls…
The key vaccine developers like Pfizer-BioNtech and Moderna are up for getting the regulatory approval from the US, Europe and the UK, which in turn gives rise to hopes of overcoming the pandemic after wrangling with it during 2020.
Read: UK set to approve Pfizer-BioNTech coronavirus vaccine from December 7 – FT
While the vaccine hopes favor the broad risk-on mood, it’s an additional positive, other than the RBNZ’s cautious optimism and NZ’s ability to tame the covid at home, for the NZD/USD buyers. However, the recent tussle between the largest customers China and Australia warrants Jacinda Ardern-led government to check every move.
Other than the positives at home, Joe Biden’s victory in the US presidential election 2020 also favors the risk-on mood.
Against this backdrop, Wall Street benchmarks flirt with the record high, marked recently, while the US dollar index (DXY) teases September’s low.
Looking forward, New Zealand’s ANZ Business Confidence and Activity Outlook, priors -15.6 and 4.6% respectively, can offer immediate direction to the NZD/USD traders ahead of China’s November month NBS Manufacturing PMI and Non-Manufacturing PMI. Although improvement in China’s Manufacturing PMI, from 51.4 to 51.5, can favor the NZD/USD bulls, traders should closely examine the details, as well as market reaction, before taking any immediate decision.
Technical analysis
Although overbought RSI conditions can recall the 0.7000 threshold, NZD/USD bears are less likely to enter unless witnessing a downside break of an ascending trend line from March 2020, at 0.6958 now. Meanwhile, the mid-2018 top, close to 0.7065, can lure the bulls.
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