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Kiwi at nine month highs

Kiwi at nine month highs

By Andrew May (Sales Trader, CMC Markets New Zealand)

In a major turn of events the NZD/USD cross has defied the 'bears' in a last ditch effort to retest February highs of over 84c. Breaking 0.8360 resistance in overnight trade we're currently sitting at 0.8395 and are witnessing the clear entrenchment of obtaining 0.8430c before the year end.

There have been a multitude of factors recently that have boosted the Kiwi's attraction, notwithstanding the weeks bullish progression in offshore market appeal. It began last week in the wake of the RBNZ rate decision and Monetary Policy Statement that left the OCR on hold at 2.5%. This was accompanied by comments from the RBNZ which were less dovish than expected and highlighted potential growth in the local economy. This set the wheels in motion and bolstered appeal for the commodity driven currency.

The Kiwi has been assisted over the last five days by a mix of local and international fundamentals such as Fonterra's $500mio share float, strong NZ house prices, exuberant US Non Farm payrolls, resurgent Chinese growth, and general risk appeal. This saw a 2.1% increase or 140 pts to the NZDUSD alone.

With fresh talks expected ahead of the US Federal Reserve FOMC meeting early tomorrow, expect to see the Kiwi high jump comfortably over that 84c cross bar, perhaps raising the bench to 0.8430 before the penultimate Christmas rally which should see it soar even higher fully supported through positive yield differential.

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