NZD/USD testing 100-hr SMA despite GDT price index poor result
|- Kiwi unphased by worst result in the GDT price index for the year so far.
- The Reserve Bank of New Zealand took a much more dovish stance.
On risk appetite revival, NZD/USD has pulled back into the descending channel and pierced the 21-4rh SMA at 0.6747 having made a high of 0.6757 and from a low of 0.6687.
On renewed risk appetite and a less dovish than expected RBA, the Kiwi has continued its advance to meet the descending 100-hr SMA as well, despite the worst result in the GDT price index for the year so far, -0.5%, (Auction avg $3,232/MT / Milk powder -7.3%).
US stocks move higher on surging oil prices, Nasdaq underperforms
Instead, global share prices and a bounce in risk appetite has allowed the bird to take flight with the SSEC closing up 0.4%, the Dax +1.3%, so far so good on Wall Street and a weaker dollar, (DXY -0.27%), NZD/USD holds firm.
RBNZ outlook
"The Reserve Bank of New Zealand took a much more dovish stance at is latest policy meeting, and signalled that rates could move down as well as up. This has caused a rethink in the forecasting community, which had been assuming that rates would remain on hold for the foreseeable future, like its larger neighbour. Our base case remains that the Bank will stay on hold, eventually followed by some modest tightening. But a more damaging trade environment would provide a suitable catalyst for NZ rates to converge on Australian rates, which are currently 25 basis points lower at 1.5%," analysts at ING Bank explained.
Week ahead:
While the market may be muted on the NY holiday, Chinese risk is elevated with US tariffs kicking on on the 6th July while nonfarm payrolls will likely be the main event.
NZD/USD levels
Key support is 0.6620 while resistance comes as 0.6850. Near term, the 100-hr SMA caps on the break of the 21-hr SMA. On the wide, while below the key 200-month moving average resistance at 0.7007 longer term technicals have kept bearish. RSIs remains biased to the downside longer term but RSI is back out of oversold territory on this move. Only a break above 0.6850 would alleviate the downside pressures and eyes are focussed on 0.6675.
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