Covid Alert Levels Update, Growth Forecasts Send Kiwi Flying

NZD picked up a bid early into the Asia-Pac session amid apparent speculation ahead of New Zealand's update on coronavirus alert levels, printing best levels as NZIER revised their forecast for this year's GDP growth to a milder contraction. The awaited announcement on alert levels allowed NZD to consolidate gains as PM Ardern said that the Cabinet would review Auckland's restrictions on Sep 21 with "a view" to relax curbs on gatherings from Sep 23 and had "agreed in principle" to lower the alert level for the rest of the country on Sep 21, which is subject to a further confirmation next Monday.

• AUD/NZD did much of the heavy-lifting in keeping the kiwi elevated, as the pair wiped out gains from the second half of last week. Some pointed to an AFR article, noting that the RBA could trim the cash rate and increase bond purchases, as a potential source of AUD weakness.
• DXY ebbed lower as e-minis traded on a firmer footing, with positive musings surrounding Covid-19 vaccine research and some M&A headlines supporting sentiment in the equity space.
• IDR retained its recent weakness as Jakarta amid the re-imposition of social distancing measures in Jakarta and lingering concerns about Bank Indonesia's autonomy, with participants awaiting more clarity on the matter as policymakers prepare to deliver their monetary policy decision on Thursday.
• The Eurozone's industrial output takes focus from here.