NZD/USD: Keeps disappointing US dollar bulls above 0.6600 as risks consolidate

NZD/USD stays positive despite recently easing from the intraday high of 0.6661 to 0.6658 during Wednesday’s Asian session. The pair was an exception to the Antipodeans on Tuesday as it managed to post mild gains despite the broad US dollar recovery and risk-off mood. In doing so, the quote might have taken clues from the International Monetary Fund’s (IMF) recent economic forecasts and odds for the upcoming election at home might have been gaining more clues.

Cordial relations with China, election optimism at home safeguard the bulls…

Wall Street and the US treasury yields both portrayed disappointment over the American stimulus stalemate, a halt in the coronavirus (COVID-19) vaccine trials by the Johnson and Johnson as well as the Eli Lily. Also challenging the markets were increasing odds of a no-deal Brexit as the European and British diplomats are still struggling for an agreement before the October 15 deadline.

On the contrary, the IMF’s global economic outlook seems to have favored the risk-takers. The Washington-based institute upwardly revised its macro GDP forecast to -4.5% from -5.2% anticipated in the June month’s report. Also pleasing the kiwi buyers could be expected improvement in China’s economic recovery that now pushes the IMF to forecast 1.9% GDP growth for 2020 versus 1.0% forecasted earlier. While Australia becomes the largest customer of New Zealand, it’s upbeat relations with Beijing, unlike the Sino-Aussie tension, favor the NZD/USD buyers amid the broad risk-off mood.

Elsewhere, New Zealand is up for a general election on October 17 and the current Prime Minister (PM) Jacinda Ardern is a market favorite due to her ability to safeguard the kiwi people during the pandemic. While most polls suggest a mixed government, like it has been for years in Wellington, odds are also rising that the Labour Party, comprising PM Ardern, will lead the nation alone.

That said, S&P 500 Futures add 0.13% to 3,509 by the press time whereas the US 10-year Treasury yields also stop their previous downside around 0.73% as we write.

Looking forward, traders will keep eyes on the RBNZ policymaker’s comments, up for 01:15 GMT, from the Citi conference while also observing risk catalysts closely.

Technical analysis

Unless providing a daily close below a confluence of 21-day and 50-day SMA, around 0.6630, NZD/USD can keep attacking 0.6675 immediate resistance.