NZD/USD Rises After Wall Street Surge. Evergrande Risks Linger

December 9, 2021

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NEW ZEALAND DOLLAR, NZD/USD, RBA CHART PACK, RBI, EVERGRANDE, OMICRON – TALKING POINTS

New Zealand Dollar gains versus US Dollar as Omicron risks continue to dissipate
RBA chart pack and Reserve Bank of India interest rate decision due out today
Evergrande risks loom over market but China easing lending rules with RRR cut
NZD/USD moves higher but prices still biased lower inside descending channel

WEDNESDAY’S ASIA-PACIFIC FORECAST

Asia-Pacific markets look set to open higher following a healthy risk-on Wall Street session. The tech-heavy Nasdaq 100 index (NDX) gained nearly 3%, while volatility dropped to its lowest levels of the month via the S&P 500’s VIX index. The Australian Dollar and New Zealand Dollar gained versus the haven-linked Greenback.

The risk-on move comes as market participants digest positive news over the Covid Omicron variant. It’s too soon for a decisive answer, but scientists believe the new strain to be less deadly than the Delta strain, which is the dominating variant around the world, based on preliminary reports. With that, many are questioning whether strict travel curbs are still warranted.

Crude oil prices moved back above the 70 mark, with prices gaining 3.5% into Asia-Pacific trading hours. Geopolitical tensions are on the rise after US President Joe Biden warned Russian President Vladimir Putin of economic sanctions over Russia’s military buildup on the Ukrainian border. The US leader didn’t specify what type of sanctions may be levied, but a move against Russia’s energy exports is possibly on the table.

GDNEW ZEALAND DOLLAR

Japan’s final third-quarter GDP reading came across the wires at -0.9% q/q, below the -0.8% analysts forecasted. Today, the Reserve Bank of Australia will release its chart pack after yesterday’s interest rate decision when the central bank left rates unchanged and expressed confidence in the recovery. The Reserve Bank of India (RBI) will release its own rate decision today.

Meanwhile, investors continue to monitor headlines over China’s Evergrande Group. The Chinese real estate company’s stock price rose Tuesday after a sharp Monday drop on Monday when a grace period over several offshore bond payments ended. A risk management committee for the embattled company was announced Monday. That appeared to ease concerns. Investors have also been encouraged by China’s central bank to ease lending rates in the economy.

NZD/USD TECHNICAL FORECAST

NZD/USD gained over 0.5% overnight, although prices continue to trade within a descending channel. A break above channel resistance would open a path higher, with possible resistance at the September swing low (0.6859). The Relative Strength Index (RSI) crossed back into the neutral territory from oversold conditions. For now, the trend remains biased lower while inside the channel.