NZD/USD jumps to the highest since August 2017 as RBNZ’s Orr, NZ FinMin favor bulls

• NZD/USD stays firmer around 42-month high flashed recently.
• RBNZ’s Orr raised bars for policy tightening, NZ FinMin requires RBNZ to focus on housing, government financial policy.
• Fed policymakers’ comments, broad US dollar weakness also back the bulls.
• ANZ Business Confidence and Activity Outlook for New Zealand can offer immediate direction but risk catalysts remain as the key.

NZD/USD bulls dominate near the highest in 3.5 years, currently around 0.7445, during the initial Asian session on Thursday. The kiwi pair’s latest jump could be attributed to the upbeat comments from RBNZ Governor Adrian Orr and the central bank’s acceptance of the New Zealand Finance Minister’s push for a change in policy guidelines. Also favoring the buyers could be the Fed policymakers’ firm rejection of reflation fears.

Not only turning down the odds of monetary policy tightening, by looking for sustained inflation at mid-point, but the readiness to further easing by RBNZ’s Orr also marked a stark rejection of fears that the New Zealand (NZ) central bank (RBNZ) is up for easing.

However, comments from New Zealand’s Finance Minister Grant Robertson, suggesting that the RBNZ needs to consider the housing market and government policies for decision-making, signals a shift into the central bank’s policy guidelines towards the bulls. In doing so, the NZ government requires the RBNZ to consider the impact on housing when making monetary and financial policy decisions.

Read: RBNZ's Orr: Prepared to provide additional stimulus if necessary

Also on the positive side could be a firm rejection of chatters concerning the monetary policy tightening and reflation fears by the Federal Reserve officials off-late. Be it Fed Chairman Jerome Powell or Vice Chair Richard Clarida, not to forget Federal Reserve Governor Lael Brainard, all of them reiterated strong support for the Fed’s easy money policy.

With the receding fears of reflation, the reduction in the US dollar’s safe-haven demand becomes imminent, which in turn helps equities and bonds in the latest market moves. The same helps commodities and Antipodeans to remain bullish and refresh multi-month high.

It’s worth mentioning that the RBNZ managed to propel the Kiwi pair the previous day despite no major changes to its monetary policy and immediate guidance.

It should, however, be noted that a lack of major data/events during Asia, except for second-tier numbers from the Australia and New Zealand Banking Group (ANZ) can restrict the NZD/USD moves. As a result, the bulls need to look for more risk catalysts for fresh impulse.

Technical analysis

Having successfully crossed 2018 top, NZD/USD bulls eye 2016 peak of 0.7485 ahead of targeting the 0.7500 threshold and 2017 high of 0.7560.