Kiwi Takes Flight

The commodity complex was firmer Thursday, with BBG Commodity Index surging to its best levels in six years. Meanwhile, optimism surrounding the U.S. earnings season supported broader risk appetite. Furthermore, RBNZ Dep Gov Bascand pointed to more persistent inflation pressures and lauded the strength of New Zealand's balance sheet. This combination was a boon for the kiwi, which finished the day as the best G10 performer, despite a jump in New Zealand's Covid-19 cases. NZD/USD rallied to its highest point in three weeks, piercing the 50-DMA and 100-DMA in the process.

• There was more positive news this morning, as BusinessNZ Manufacturing PMI showed that the sector returned into expansion last month. However, although headline index improved to 51.4 from 39.7, BusinessNZ noted that "expansion has some way to go before getting back to what was seen during the first half of the year," adding that recovery is uneven across regions. Furthermore, "the proportion of negative comments from respondents remains high at 71%, although slightly down from the 78% recorded in August."
• Health Min Hipkins noted that low-risk patients will be allowed to self-isolate at home from today, which will free up more places in Managed Isolation Facilities.
• New Zealand's economic docket next week is headlined by Monday's quarterly CPI data, a key release ahead of the next RBNZ monetary policy meeting slated for Nov 24.
• NZD/USD little changed at typing, last seen at $0.7035. Bulls would be pleased by a clearance of Sep 23 high of $0.7093, which would bring the 200-DMA at $0.7102 into view. On the flip side, bears look for a pullback under Oct 11 low/round figure of $0.6904/00.