Kiwi Extends Gains After S&P Raises NZ Credit Rating

The kiwi picked up a fresh bid after the S&P upgraded New Zealand to AA+ from AA, with outlook changed to stable from positive. S&P said that New Zealand's economy enjoys a relatively quick pace of recovery, owing to the country's successful effort to contain the spread of Covid-19 infections, while its monetary flexibility, wealthy economy, and institutions are "conducive to swift and decisive policy actions and offset the country's external imbalances." The rating agency added that "there is ample headroom within the current 'AA+' rating to provide the country with the flexibility to address potential risks associated with its high levels of external debt, its high private-sector debt, and rising property prices that could present risks to the stability of its financial system."

• NZD/USD has punched through resistance from Jan 6 high of $0.7315, flagged in the previous bullet. The rate last trades +30 pips at $0.7329, just shy of the session high located at $0.7338, the best level since Apr 2018. Bullish focus turns to $0.7395, where the rate topped out on Apr 13, 2018.
• AUD/NZD has turned its tail and given away its opening gains, which allowed it to print a one-month high early on. It last changes hands at NZ$1.0773, 9 pips worse off. Bears look for a slide through Feb 18 low of NZ$1.0755, towards 200-DMA/Feb 16 low at NZ$1.0725/20. Bulls keep an eye on Jan 19 high of NZ$1.0843.
• NZD/JPY has added 41 pips thus far and last deals at Y77.36 after hitting best levels since Dec 2018. A sustained rally above Deb 12, 2018 high of Y78.31 would expose Dec 4, 2018 high of Y78.86. Bears need a dip through Feb 17 low of Y75.80 to get some reprieve.