NZD/USD refreshes two-week top above 0.6750 amid calls of RBNZ’s inaction

NZD/USD prints fresh high in two weeks while rising to 0.6769 during the pre-Tokyo open trading on Friday. The kiwi pair recently surged after New Zealand’s (NZ) Finance Minister Grant Robertson turned down calls of any action in next week’s Reserve Bank of New Zealand (RBNZ) meeting. Also strengthening the pair’s strength could be the risk reset mood and the US dollar weakness, not to forget the previous day’s upbeat NZ Q2 GDP data.

Are we still dovish on RBNZ?

A weaker than expected economic contraction due to the coronavirus (COVID-19), -12.2% QoQ versus -12.8% forecast, leads NZ FinMin Robertson to mention that the economy is rebounding from the recession, as well as, “will improve further by early 2021.” The policymaker also mentioned that the RBNZ is committed to 0.25% OCR until March.

With this, markets are stepping back from their previously dovish bias for the RBNZ’s next monetary policy meeting, up for Wednesday, which in turn propels the kiwi pair towards printing a six-day winning streak.

Additionally, the market’s risk reset, as portrayed by 0.20% gains of S&P 500 Futures, joins the US dollar’s recent weakness to please the pair buyers. The greenback challenged a one-week top on Thursday before snapping a two-day rise by the day’s end. It should be noted that the market’s retracement of post-FOMC moves took clues from mixed US data and the Federal Reserve’s signal of another stress test for large banks to weigh on the greenback off-late.

Even so, the bulls remain cautious as the Sino-American tussle is about to restart, this time over the Taiwan issue, while the coronavirus (COVID-19) resurgence also challenges the market mood.

Given the lack of major data/events up for publishing during the Asian session, market players will keep eyes on the risk catalyst while trying to cheer the latest bullish mood.

Technical analysis

Sustained trading beyond 21-day SMA, currently around 0.6680, keeps NZD/USD directed towards the monthly top of 0.6790 and the 0.6800 threshold. However, an upward sloping trend line form July 31, at 0.6828 now, will question the bulls afterward.