NZD/USD: correction stalled and downside open below 0.6720 support
|- NZD/USD bears looking into a test below the 0.6720 support as commodity complex is weighed by Yuan.
- Oil is propping up commodities for now, but the RBNZ is around the corner and could weigh on the bird on a dovish outcome.
NZD/USD is not convincing on the correction and was met with supply up at 0.6766 on Friday and forced into close of 0.6744 where markets in Asia picked up the batton and attempted the upside only to hit supply lower down at 0.6755. The pair has since been on a steady decline into NY trade today where a low was made at 0.6724 before a close in the 0.6730s.
The greenback was better bid on Monday throughout the European session but failed to keep up the pace as the NY session dragged on in quiet summertime markets, although it was meeting 2018 highs in early North American trade within the 95.1990-95.5150 DXY range. Meanwhile, the kiwi drifted lower without there being any major economic news and instead, traders were fixated on the value if the Yuan which has been drifting lower on the way to the line in sand at USD/CNH 7.00 which offers a bearish bias for commodity-FX - although higher oil is, so far, propping up the commodity complex with a rally today through the $69 handle in WTI.
RBNZ’s key OCR forecast to be little changed
Meanwhile, heads will turn to the RBNZ, and there, analysts at ANZ explained that things are flipped:
"Q2 CPI inflation was a little stronger than anticipated, but the risks to the growth outlook are clearly to the downside. It comes out in the wash; we expect the RBNZ’s key OCR forecast to be little changed, though it remains to be seen how much of the growth downside goes into the forecast track and how much is parked in the “risks” section of the document."
NZD/USD levels
0.6720 guards a break of the 18th July lows of 0.6713 guarding 1st July lows of 0.6689 and 0.6616 further down. 0.6550 then guards a run to the 0.6470s. On the upside, however, resistance remains located at 0.6860. A test here could open a subsequent attack to 0.6920 as the June high. The 200-month moving average resistance is at 0.7020.
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