New Zealand Dollar Hits Fresh 2009 High, British Pound Under Performs

The New Zealand dollar advanced against the greenback for the second day and surged to a fresh yearly high of 0.7142 following the rebound in risk appetite, while the British pound remained weighed as investors scaled back long-term expectations for higher interest rates in the U.K.

The New Zealand dollar advanced against the greenback for the second day and surged to a fresh yearly high of 0.7142 following the rebound in risk appetite, and the NZD/USD may continue to push higher over the near-term as market sentiment improves. As daily price action exceeds the ATR, with the 30-minute RSI falling back from overbought territory, the kiwi-dollar may fall back over the next few hours of trading and fill-in the gap from the 200-SMA (0.7034) however, the rise in global equities paired with higher commodity prices may lead the NZD/USD to hold 0.7091, the previous week’s high, as investors move into higher yielding assets.

The British pound rose to an intraday high of 1.6531 following the less than expected rise in U.K. unemployment, and may continue to retrace the sell-off from earlier this week as the U.S. dollar weakens across the board following the rise in risk appetite. The GBP/USD has moved nearly 60% of its average true range after finding support ahead of the 20-Day moving average at 1.6415, and has climbed back above the 50-Day (1.6476) during the early hours of the North American session. As global equities push higher, we may see the pound-dollar continue to push higher to retrace the two-day decline and fill-in the gap from the 200-SMA (1.6590) however, as investors scale back long-term expectations for higher interest rates, the pair may continue to hold below the 100-SMA (1.6528) throughout the U.S. trade.

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[I]To discuss this report contact David Song, Currency Analyst: <[email protected]>[/I]