NZD/USD hits 34-month high as S&P lifts New Zealand's credit rating

• NZD/USD crosses above January's high to reach the highest level since April 2018. 
• S&P lifts New Zealand's credit rating, drawing more bids for the Kiwi. 
• The Kiwi has been bid in recent days with commodities rallying on expectations for economic recovery.

NZD/USD extends early gains, with major ratings agency Standard & Poor's (S&P) raising New Zealand's credit rating to AA+ from AA. 

"We now believe that the government's credit metrics can withstand potential damage from negative shocks to the economy," the rating agency noted, adding that the country has been able to contain the coronavirus pandemic better than most others, and its economy is recovering relatively quickly. 

The Kiwi reached a high of 0.7338 soon before press time – the level last seen in April 2018 – extending the early rise from 0.7289 to 0.7315 and surpassing the previous multi-year peak of 0.7315 reached on Jan. 6. 

The NZD and other commodity dollars such as the AUD and CAD have been trending north against the US dollar in recent days, tracking the rally in commodities such as oil, copper, iron ore, and other base metals. 

Analysts at JP Morgan said earlier this month that commodities have just begun a new supercycle of years-long gains. The reflation trade seems to have been fueled by coronavirus vaccine optimism and expectations for fiscal stimulus-driven recovery. 

Technical levels