Kiwi extends rally on PM’s comment

The Kiwi surprised on the upside in very quiet trading session, made high at 0.6599 levels.

A strong upside move was initiated by New Zealand Prime Minister John Key, who indirectly hinted at the possibility of the kiwi being oversold by stating that the currency has fallen faster-than-expected.

Later this week RBNZ meeting will move the Kiwi crosses into focus.

The RBNZ should cut by 25 basis points, but given the market is pricing a 12% chance of a 50 basis point cut we could see some modest short covering, especially as the leveraged community are running the biggest net short position ever.