NZD/USD holds its perch in positive territory, highest levels since COVID-19 outbreak

• NZD/USD rallied overnight to the highest levels since the outbreak of the virus.
• Global factors playing out, risk-on tones supporting the bird's flight.

NZD/USD is trading at 0.6642 sitting between a range of 0.6635 0.6645 following comments drawn from the Reserve Bank of New Zealand, stating that the need to provide enhanced liquidity has diminished. 

The Reserve Bank of New Zealand has noted that the balance of economic risks was still to the downside at its last interest meeting at the end of June.

The RBNZ had also stated that the committee continues to prepare for additional monetary policy tools.

RBNZ optimism

The RBNZ said that it would review large scale asset purchase quantum at regular intervals while administering monetary policy the will continue to provide "significant support".

Meanwhile, the removal of COVID-19 restrictions on domestic activity has continued to give the New Zealand economy a boost. 

The communication that it will now be reducing its interventions via its term auction facility from daily to weekly, noting that it sees domestic financial market stability should be a positive feature for the currency.

Analysts at Westpac noted that the manufacturing sector is on the mend also, with the PMI manufacturing index rising strongly a two-year high in June.

"However, as recent news demonstrates, the pandemic has brought to a head some long-running pressures within heavy manufacturing in particular."

GDT Price Index dropped

In more recent news, the GDT Price Index dropped 0.7% overnight, which was as expected. 

"Whole milk powder prices were still well supported, gaining 0.6% with strong prices continuing to be paid for the shorter-dated delivery periods.

But prices for skim milk powder and milk fat products eased," analysts at ANZ Bank explained. 
However, the bird took off in a flight in a clean break of the 0.66 level, scoring the highest price vs the US dollar since the outbreak of the virus. 

"The move was fuelled mostly by global factors (equity rally, USD weakness, growing vaccine optimism), but with a local flavour too, with higher WMP prices giving it a boost," the analysts at ANZ explained.

Minor corrections aside, it’s difficult to see the momentum subsiding, even though markets seem to be “priced for perfection”, suggesting a degree of fragility. 

Consider, for example, what may happen if vaccine hopes are dashed, or geopolitical tensions flare-up. But for now, it’s “all go” for the Kiwi.

NZD/USD levels