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NZD buoyed by encouraging signs for COVID19 vaccine

NZD - New Zealand Dollar

The New Zealand dollar outperformed through trade on Wednesday, advancing back through 0.6550 and touching intraday highs at 0.6580 following encouraging signs in early stage COVID19 clinical vaccine trials. Moderna reported its phase one testing of 45 patients showed all participants produced the antibodies needed to fight of COVID19, an incredible result and encouraging sign as testing increase to a broader sample size of 30,000. Risk aversion faltered and equities surged dragging commodity and growth led currencies higher as optimism across financial markets rallied. Investors latched onto the positive headline continuing to ignore the slew of negative COVID19 news, confident that monetary and fiscal policy will continue to prop up financial markets and instead chasing gains on upbeat data points.

Having failed to break above 0.66 the NZD still remains firmly entrenched within our expected trading band with attentions squarely affixed to ongoing vaccine developments. A sustained upturn in optimism and further positive study results will continue to see top end resistance handles tested.

Key Movers

The US Dollar fell to a one month low through trade on Wednesday as hopes for a COVID19 vaccine were buoyed by early stage Clinical trials. Risk appetite surged, dragging equities and commodity currencies higher at the expense of have assets. The Canadian Dollar and Norwegian Kroner outperformed major counterparts while the USD, JPY and CHF all faltered amid the broader risk on move.

The Euro advance continued, marking fresh four month highs above 1.1450. Optimism surrounding this weeks EU summit and the proposed recovery fund continue to support the single currency while broader USD weakness helped extend gains. There is a hope leaders will reach an agreement surrounding the 750 billion Euro rescue plan, driving gains and hopes the Euro area will continues its faster than anticipated economic recovery. With expectations Europe will recover at a faster pace than its US counterpart the Euro is primed to push back through March highs at 1.15.

Attentions today remains squarely affixed to changing COVID19news with Astrazeneca and Oxford University expected to release result of its stage 3 clinical vaccine trail before the end of the week with positive results opening the door to an extended risk on run.

Expected Ranges

NZD/USD: 0.6480 - 0.6630 ▲

NZD/EUR: 0.5720 - 0.5830 ▲

GBP/NZD: 1.9020 - 1.9280 ▼

NZD/AUD: 0.9350 - 0.9450 ▲

NZD/CAD: 0.8800 - 0.8950 ▼