Yesterday's small rise in negativity was mainly due to the increased uncertainty about the plans of OPEC and OPEC+. OPEC ended its meeting on Monday without a decision, while OPEC+ postponed its meeting to December 3 instead of today's schedule. As a result, oil declined slightly, which led to a correction in commodity markets.
Apparently, the alliance is not yet able to develop an agreed position. In Asia, demand for oil is growing, but in Europe, it is still weak. Nevertheless, reports of successful vaccine trials and the likelihood of launching new massive stimulus measures from the Fed and the ECB will cause optimism. On the other hand, Fed's head, Mr. Powell will address the US Senate Banking Committee today, and he will appear before the House of Representatives tomorrow, possibly announcing his intention to change QE. The ISM production will also be published today.
In general, the US dollar remains under pressure due to the rising probability of new stimulus measures. On Monday, U.S. Congress began looking for a solution that would save the government from a shutdown, as funding for most federal agencies expires on December 11.
NZD/USD
It can be recalled that expectations for the RBNZ rate have recently changed. If before the US election, the markets were inclined to believe that the RBNZ would implement the reduction of rate to -0.25% in April next year, which would significantly lower the attractiveness of NZD-denominated assets and means that it would lead to an exit from them and sales of the New Zealand currency, then now, majority of observers are inclined to believe that a rate cut may not be expected at all.
New Zealand's economy looks much better than most European economies. Growth in retail sales in the third quarter amounted to 28% against the forecasted 20%, while the trade balance updates 30-year records. It seems that COVID-19 have had no impact on the country's trading activity.
Consumer confidence indicator from ANZ in November was at 106.9p, which is slightly worse than October, but significantly higher than the annual average. Perhaps, the only significant negative factor is the loss of foreign tourism, which can slow down the recovery rate in the summer months, but this also adds positivity – the likelihood of new quarantine measures is reduced, given the positive news about vaccines.
The overall positivity pushes the NZD upwards. Thus, the estimated fair price predicts a continuation of the upward trend.
The upward impulse remains strong. The target is 0.7140/50, however, it might not be reached on the first try, since a correction is possible amid a slight increase in tension. In turn, a pullback is possible to the support of 0.6810/30, with a decrease in purchases from more convenient levels.
AUD/USD
The RBA held a regular meeting on monetary policy this morning. Given that the Bank has taken a number of measures to support the economy recently, and the current indicators are generally better than expected, it is expected to leave the current policy unchanged. In 5 months, the 100 billion-dollar support program (essentially QE) expires, and it is more likely that the program will not be extended against the background of a steady economic recovery.
Positivity currently dominates. According to the latest CFTC report, the net short position on AUD has declined again. Chinese reports are aso positive, supporting the AUD. The target price is growing steadily, which indicates a strong bullish momentum.
On Wednesday, GDP data is expected to be released. A growth is expected above consensus (NAB bank expects 4.1% against 2.5% forecast), which may further support the Australian currency.
Technically, the AUD/USD pair is accumulating strength to approach the strong resistance level of 0.7415, which looks inevitable and will likely be successful. If this level breaks down, buying long positions can be considered. The next resistance here is 0.7495.
