Arnaud Masset
Swissquote Bank Ltd
The New Zealand dollar extended losses on Tuesday amid a massive in business confidence. During the Asian session, the Kiwi fell 0.60% against the greenback as it reached $0.7215. Business confidence tumbled to zero, the lowest level since September 2015, compared to 18.3 in August. The drop came amid a significant deterioration of expected business conditions, especially in the manufacturing industry. In addition, the uncertainty stemming from Saturday’s election as there was no clear winner. The ruling National Party got only 46% of the vote, while the opposition (composed of the Labour party and the Green) acquired roughly 42% of the vote. The Kiwi is ahead of a difficult periods as the uncertainty will last several weeks. Indeed, both sides will try to get the support of the NZ First Party to build a coalition government.
Investors, and especially leveraged speculators, already started to reduce their long speculative positions. Net long non-commercial futures positions accounted for roughly 63% of total open interest in early August. As of last week, this number decrease to 18%, suggesting that the Kiwi is running out of steam.
Stay on top of the markets with Swissquote’s News & Analysis
From a technical standpoint, a key support can be found at $0.7146 (200-dma), while on the upside the 0.73 area will act as main short-term resistance (50-dma and 38.2% Fibonacci level on July - August retracement). On the medium-term, NZD/USD continues to trade within its downtrend channel. A return towards $0.70 cannot be ruled, especially now that the Federal Reserve in the US is set to tighten monetary policy further in December, while having already announced the beginning of its balance unwinding for October.
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.