New Zealand Dollar May Rise, Copper Price Outlook Hones in on All-Time High

• New Zealand Dollar, Australian Dollar, Canadian Dollar rose versus US Dollar

• Market sentiment was upbeat, with Copper futures closing at highest since 2011

• Japanese Yen eyeing the BoJ, APAC equities may follow rosy Wall Street lead

The growth-linked New Zealand Dollar outperformed the US Dollar over the past 24 hours, rising alongside the Australian and Canadian Dollars. Market sentiment was broadly upbeat, with indexes in Europe and North America closing in the green. On Wall Street, the Dow Jones, S&P 500 and tech-heavy Nasdaq Composite performed -0.18%, +0.18% and +0.87% respectively.

The economic calendar docket was fairly quiet on Monday, with the exception of German IFO expectations and US durable goods orders. Both outcomes missed expectations, hinting that traders were likely focusing on broader fundamental themes. Markets may be looking forward to the Federal Reserve later this week, where the central bank is expected to reiterate recent dovish rhetoric.

This may be why growth-oriented stocks have been outperforming, as Treasury yields have been on the decline. The 10-year rate rose initially over the past 24 hours, but gave up most of its gains into the close. First-quarter earnings reports have mostly been rosy, further compounding the optimistic tone from investors thus far. This is despite US President Joe Biden announcing long-term capital gains tax hikes for the wealthy.

NZD/USD closed at its highest since March 4th on Monday, extending last months bottom. The breakout above the 23.6% Fibonacci extension at 0.7174 and falling resistance from February have been confirmed, exposing the 38.2% level at 0.7316. Beyond the latter sits peaks from 2018, making for a critical zone of resistance between 0.7395 and 0.7437.

TUESDAYS ASIA PACIFIC TRADING SESSION – COPPER, BANK OF JAPAN

The rosy market tone may extend into Tuesdays Asia-Pacific market hours, with a particular focus on copper. The red metal, which is frequently used as a barometer of global growth, closed at its highest since 2011. A combination of Chinese demand and policy to tackle climate change are likely driving copper higher. Mining the red metal tends to contribute to climate change, so reducing emissions may create supply imbalances.

The Japanese Yen will also be awaiting the Bank of Japan monetary policy announcement. But, the central bank is likely to maintain its policy balance rate and 10-year yield target on hold. Traders will pay closer attention to how its outlook on the economy may impact asset purchases. Still, bond yields in Japan may remain fairly low relative to other parts of the world, leaving JPY to focus on its anti-risk market dynamic.

COPPER TECHNICAL ANALYSIS

Copper futures extending gains above a Descending Triangle, opening the door to further appreciation. Prices are just shy of the all-time highs, making for a key zone of resistance between 4.54 and 4.65. Negative RSI divergence does show that upside momentum is fading, which can at times precede a turn lower. Such an outcome would likely place the focus on the 50-day Simple Moving Average for key support.

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