This week, a sense of calm has returned, supported by another round of research that shows the Omicron variant is less likely to require hospital treatment than the Delta variant.
Along with economic data released overnight that showed the Omicron outbreak has thus failed to dent the economic recovery in the U.S.
Revised GDP data showed the U.S. economy grew by a faster than expected 2.3% in Q3, above preliminary estimates of 2.1%. The Consumer Confidence index rose to 115.8 in December, up 111.9 last month.
Also, soothing nerves, U.S. President Joe Biden reiterated that the government would not reintroduce mobility restrictions and reports that President Biden remains hopeful that a deal can still be done with Senator Manchin to pass the $2tn stimulus bill through Congress.
Reflecting the factors outlined above, the VIX index has eased from a high of 27.39 at the start of the week to close at 18.62 overnight, helping the antipodean currencies begin to regain lost ground.
Adding intrigue to the NZDUSD story, IMM data ending December 14th shows that NZD longs were cut in a 3.8 sigma week on week change, the second-largest position cleanse in the history of the NZD IMM data, triggered by a sustained break below .6800c.
However, since then, the NZDUSD has formed a double low at .6701, just ahead of nine-month trend channel support, coming in at .6680, providing evidence of basing.
Providing the NZDUSD continues to respect the support at .6700/80, a break above resistance at .6820/30 would open the way for the NZDUSD to rally towards the next upside level at .6880/00 into year-end.
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