NZD/USD: Holds above 0.7100 despite week-start gap down
- NZD/USD bounces off 0.7112 to fill the downside gap of 0.7135.
- US policymakers about to officially announce the agreement over the stimulus bill.
- Brexit, news covid variant weigh on the risks.
- PBOC rate decision, New Zealand Credit Card Spending eyed for intermediate direction.
NZD/USD eyes filling the week-start downside gap of 0.7135 while revisiting the 0.7120 level during the early Asian session on Monday. The kiwi pair dropped to 0.7112 during its latest downside before marking the recoveries. While worries concerning Brexit and the new variant of the coronavirus (COVID-19) weigh on the risks and Antipodeans, hopes of the US covid stimulus favor the bulls.
Although global markets are yet to fully recover from the pandemic woes, despite vaccine hopes, the UK is up for fresh activity restrictions with the variant of the deadly virus. During the weekend, UK PM Boris Johnson announced a Tier-4 lockdown in London and Southeast England amid the virus outbreak. Also, European countries including Italy and France join Turkey to suspend travels with Britain to tame the virus outbreak.
Also weighing on the market sentiment could be chatters around no Brexit deal in 2020. While the European Union (EU) and the UK policymakers are jostling over fisheries and level playing field, EU Chairman of the Foreign Affairs Committee David Callister tweeted that the European Parliament will not be in a position to grant consent to an agreement this year.
On the positive side, US House Majority Leader Mitch McConnell sounds positive in his latest tweets for the much-awaited aid package. However, CNN’s Manu Raju said, “House will vote Monday on covid relief package along with the $1.4T omnibus spending bill, according to Steny Hoyer, who relayed that message to Democrats on a caucus call, sources said. The House will pass a one-day stopgap tonight to avoid a government shutdown at midnight.”
Against this backdrop, S&P 500 Futures drop 0.25% intraday while commodity-linked currencies are trying to negate the week-start losses by press time.
Looking forward, the Interest Rate Decision by the People’s Bank of China (PBOC), expected to stand pat at 3.85%, is likely to be a non-event unless any surprises. Following that, New Zealand’s November Credit Card Spending, prior -6.3% YoY, will offer intermediate direction to NZD/USD pair traders. However, major attention will be given to the risk catalysts.
Technical analysis
An ascending trend line from November 13, at 0.7096 now, adds to the downside barriers below the 0.7100 round-figure for NZD/USD sellers.