NZD/USD bulls keep 0.7100 on radar despite mixed vaccine news

NZD/USD wavers inside the nearly 15-pip trading range, currently around 0.7075, during the early Asian trading on Friday. Even so, the kiwi pair stays near the highest levels since late-April 2018. Although mixed signals concerning the US stimulus and the coronavirus (COVID-19) vaccine have troubled the quote’s upside momentum off-late, the overall weakness of the US dollar joins upbeat data at home to favor the bulls.

New Zealand’s third quarter (Q3) Construction Work Done marked a huge bounce off -22.4% in Q2 to +34.6% QoQ. Details suggest the Residential Construction grew 35.9% QoQ while the Non-Residential ones rose +32.6% during the stated period.

Risks dwindle as Moderna’s optimism concerning inventories and stocks counter the Pfizer-BioNTech fear of less supply due to the raw material glitch. It should also be noted that the US President-elect Joe Biden’s comments like, “I will get the covid-19 vaccine when Dr. Fauci says it is safe and will take it publicly,” also dims the vaccine hopes.

On the other hand, the House Republican majority leader Mitch McConnell said to have a good conversation with Speaker Nancy Pelosi on stimulus. Mr. McConnell recently turned down the bipartisan proposal of $908 billion as the COVID-19 stimulus even as US President Donald Trump showed readiness to sign the bills if the Senate approves.

Also on the negative side could be the US-China tension and Beijing’s hint of further trade-negative measures for New Zealand’s largest trading partner Australia.

It should be noted that the market’s optimism towards the New Zealand dollar (NZD) remains intact amid the Reserve Bank of New Zealand’s comparatively more bullion outlook as well as Jacinda Ardern-led government’s ability to tame the pandemic at home.

While identifying the aforementioned catalysts, analysts at the Australia and New Zealand Banking Group (ANZ) said, “Call it December seasonality come early, call it what you will, but the market’s appetite for the NZD is insatiable at the moment, and while the rubber bands of momentum and valuation are starting to get stretched, technically it looks very solid; commodity prices are rising; and nobody wants to own the USD. And in a world of abundant liquidity, markets have tended to ignore valuations, risking further upside. A break of 0.7160 would be extremely bullish.”

Looking forward, the US employment report for November will be the key data to watch while risk catalysts are likely to keep the driver’s seat.

Read: Nonfarm Payrolls Preview: Another dollar’s disappointment underway

Technical analysis

Unless breaking below 0.7025 immediate support confluence, comprising 10-day SMA and an ascending trend line from November 13, NZD/USD buyers are well-supported to attack the March 2018 low surrounding 0.7150.