2020.10.1907:20:00UTC+00NZ Dollar Firms As Labour's Ardern Returns To Power After Landslide Victory

The NZ dollar drifted higher against its major trading partners in the Asian session on Monday, as a historic victory for New Zealand's Labour Party in this weekend's election underscored the government's success in battling the coronavirus.

Prime Minister Jacinda Ardern has secured a second term in office, defeating the National Party in the general election on Saturday.

According to the Electoral Commission, the Labour Party has won 49 percent of the vote, which would give it 64 seats in the 120-member parliament.

The score was the highest for the Labour party since the introduction of a voting system known as Mixed Member Proportional representation in 1996.

Ardern's re-election was supported by her success in handling the country's COVID-19 outbreak.

Ardern said that the government would focus on tackling COVID, raise funding for disadvantaged schools and enhance income taxes on wealthy people.

Sentiment was underpinned by China data showing an economic recovery from the Covid-19 pandemic.

The National Bureau of Statistics said China's gross domestic product was up 4.9 percent on year in the third quarter of 2020, missing forecasts for a gain of 5.2 percent but still up from 3.2 percent in the three months prior.

The currency held steady against its key counterparts on Friday, excepting the aussie.

The kiwi appreciated 0.4 percent against the greenback, approaching a 4-day peak of 0.6630. The NZD/USD pair had ended Friday's trading session at 0.6601. Immediate resistance for the kiwi is likely seen around the 0.68 level.

The kiwi added 0.5 percent to touch a 4-day high of 69.91 against the yen. The pair was valued at 69.59 at last week's close. Further rally in the currency may face resistance around the 72.5 level.

Data from the Ministry of Finance showed that Japan recorded a merchandise trade surplus of 674.978 billion yen in September.

That was shy of expectations for a surplus of 989.8 billion yen, but still up from the 248.3 billion yen surplus in August.

The NZ currency was up by 0.3 percent against the euro, at a 4-day high of 1.7680. The kiwi was worth 1.7731 per euro at Friday's New York session close. Should the currency rallies further, it is likely to test resistance near the 1.70 region.

Although the kiwi firmed to near a 3-month high of 1.0700 versus the aussie, it pulled back in subsequent deals. The kiwi was trading at 1.0710 versus the aussie when it finished deals on Friday. The kiwi may challenge support near the 1.08 mark.

Looking ahead, Canada wholesale sales for August and U.S. NAHB housing market index for October will be out in the New York session.