The NZD/USD surged to a fresh yearly high of 0.8634 during the overnight trade as investors speculate the Reserve Bank of New Zealand to tighten policy over the next 12 months, and expectations for higher interest rates may continue to drive the New Zealand dollar higher throughout the second-half of the year.
[B]Currency Pair:[/B] NZD/USD
[B]Chart:[/B] 60 Min Charts
[B]Short-Term Bias:[/B] Flat
[B][U]Analysis[/U][/B]
The NZD/USD surged to a fresh yearly high of 0.8634 during the overnight trade as investors speculate the Reserve Bank of New Zealand to tighten policy over the next 12 months, and expectations for higher interest rates may continue to drive the New Zealand dollar higher throughout the second-half of the year. After reaching a high of 0.7220 in August, the kiwi-dollar tumbled to a low of 0.4894 in March as traders curbed their appetite for higher risk/reward investments however, the rebound in market sentiment may support the rally over the near-term as risk trends continue to dictate price action in the currency market. Meanwhile, Credit Suisse overnight index swaps are up by more than 100bp as investors anticipate the RBNZ to hike borrowing costs next year, and the rise in the interest rate outlook may lead the pair to retrace the sell-off from the previous year as growth prospects improve. Over the next few hours of trading, we may see the NZD/USD continue to push higher following the rally in the equities market however, as the RSI approaches overbought territory, gains are likely to be capped, and we may see the pair fall back towards 0.6710-20 (78.6% Fib) to fill-in the gap from the 120 SMA at 0.6728. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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