Firmer underlying tone is likely to lead to New Zealand Dollar (NZD) trading in a higher range of 0.5955/0.5980. In the longer run, NZD could break above 0.5990; the scope for further advance may be limited, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Scope for further advance may be limited

24-HOUR VIEW: "When NZD was at 0.5950 in the early Asian session yesterday, we indicated that 'the price movements are likely part of a consolidation phase, expected to be between 0.5935 and 0.5965.' However, NZD traded in a higher range of 0.5952/0.5975 and then closed at 0.5970 (+0.25%). The underlying tone has firmed somewhat, but this is likely to lead to a higher range of 0.5955/0.5980 rather than a sustained rise."

1-3 WEEKS VIEW: "Our update from last Friday (12 Sep, spot at 0.5970) still stands. As highlighted, 'while there is a chance for NZD to rise above 0.5990, we believe the scope for further advance may be limited.' We added, 'looking ahead, the next level to watch above 0.5990 is 0.6010.' Overall, only a breach of 0.5940 (‘strong support level previously at 0.5925) would indicate that the advance from early last week has run its course."