The kiwi has been offered in market position squaring ahead of the Fed as the US dollar attempts to base.
The price is in a corrective wave of the recent impulse on the hourly time frame, pressing in the rising trendline support.
NZD/USD is currently trading at 0.6653 between a range of 0.6633 and 0.6702 and down 0.47% on the day as the price moves to test below a 15-min trendline support.
It has been a consolidation day for the most part and markets giving back some ground on squaring of positions ahead of the Federal Reserve and in markets that might be considered somewhat overstretched against the US dollar.
The DXY has been defending the 93 areas while gold and other assets also taking a breather.
Daily volatility aside, the USD remains unloved and with a very dovish tone likely to emerge from tomorrow’s FOMC meeting, it’s difficult to see that changing. The Fed’s monetary policy framework review isn’t due till later, but most expect the Fed to target higher inflation, which means easier policy for longer, and further USD debasement.,
analysts at ANZ Bank explained in their NZD analysis as the day begins in early Asia.
A lack of success in containing the virus and fiscal disagreement isn’t helping the USD; meanwhile New Zealand is open for business, albeit with deep scars. The easier road is the high road, even if it’s mostly a USD story.
RBNZ in focus
Meanwhile, the antipodeans are going to be under the spotlight in coming days as the Reserve Bank of Australia meets next week and the Reserve Bank of New Zealand meets on the 12th August.
Casting minds back to the prior meeting, the RBNZ slashed the OCR to 0.25% on 16 March, 9 days before the scheduled meeting.
Governor Orr said the OCR “will remain at this level for at least the next 12 months. On 16 March, the MPC “also agreed that should further stimulus be required, a LargeScale Asset Purchase programme of NewZealand government bonds would be preferable to further OCR reductions.”
Just a week later, the RBNZ confirmed its first quantitative easing program, pledging “up to” NZD30bn of NZ government bonds “across a range of maturities, in the secondary market over the next 12 months.” It increased this to NZD60bn in May.
The RBNZ held steady in June but while welcoming local Covid-19 containment and supportive fiscal policy, fretted over the global pandemic and the stronger kiwi, saying that itis 'prepared to provide additional stimulus as necessary.'
analysts at Westpac note.
Westpac expects the RBNZ will have to deliver further easing. Our base case remains for the cash rate to be cut to -0.5% in Q22021, with banks to be ready for negative rates by end-2020.
NZD/USD levels
In the above hourly chart, the price has been rejected at a 50% mean reversion of the impulse.
-637315642448921514.png)
15 min chart bears are breaking the trendline.
The corrective wave is testing trendline-support that if broken, could equate to a fresh impulsive wave to the downside.
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