NZD/USD bounces up and approaches 20-month highs at 0.6915

• NZD/USD bounces up and approaches multi-month highs at 0.6915
• The kiwi appreciates on positive market sentiment.
• NZD/USD: seen targeting levels past 0.7000 – Westpac.

The New Zealand dollar is being one of the best G10 performers on Monday. The pair has rallied nearly 0.8% on the day, to reach 0.6900 area, only a few pips below 06915 multi-month high.

Kiwi appreciates on risk sentiment

The risk-sensitive kiwi has been buoyed by the positive market mood triggered on the back of upbeat Chinese manufacturing data and the encouraging results of Moderna’s COVID-19 vaccine.

Chinese industrial production remained growing at a 6.9% yearly pace in October, against market expectations of a slight deceleration to 6.5% while the foreign investment increased 6.4% on the year, beating expectations of a 2.5% increment. These figures have confirmed that Chinese recovery is picking up pace and boosted demand for the NZD as China is one of New Zealand’s main trading partners.

Furthermore, the drugmaker Moderna announced today that the tests of its COVID-19 vaccine revealed that it is 94.5% effective. This has boosted investors’ optimism about a cure for the pandemic, providing a fresh impulse to the kiwi.

NZD/USD might reach levels past 0.7000 – Westpac

According to the Westpac FX Analysis Team, the NZD is on the path towards levels past 0.7000 and any pullback to 0.6800 would be a good buying opportunity: “We continue to favour further upside to 0.7000+ multi-week and view any pullback to the 0.6800 area as a buying opportunity. Post-MPS commentary from RBNZ officials suggests that if the FLP scheme causes mortgage rates to fall then OCR easing may be less necessary.”

Technical levels to watch