NZD/USD Breaks Out Of Familiar Range, RBNZ Chatter Continues

NZD/USD caught a bid into Tuesday's London session, which allowed the pair to more than wipe out loses posted in Asia-Pac hours & rally through resistance from Jan 13 & 14 highs ($0.7240) to its best levels in two weeks. The kiwi gained in tandem with other commodity-tied currencies, while USD sold off ahead of the month-end & the Fed's MonPol decision.

• In NZ, focus on Tuesday fell on the latest update on the Covid-19 situation from PM Ardern. She noted that "we can expect our borders to be impacted for much of this year," while the vaccination campaign will likely kick off no sooner than in mid-2021.
• The RBNZ's former Chief Economist McDermott told MNI that the RBNZ might taper its QE programme this year amid record high house prices.
• His comments tied up well with the latest forecast from Capital Economics, who suggested that the RBNZ could end its QE scheme by mid-2021 and then deliver three 25bp OCR hikes by 2023.
• The rate last trades at $0.7237, little changed on the day. A break above $0.7248, which capped gains on Tuesday, is needed to turn bullish focus to Jan 6 high of $0.7315. Bears look for a break under the 50-DMA at $0.7116, followed by Jan 18 low of $0.7096.
• New Zealand's trade balance comes out tomorrow, with ANZ Consumer Confidence due Friday.