NZD/USD: Coming up for air on 0.65 handle and treading water


  • NZD/USD outperforming in upside correction.
  • Eyes on Fed this week.

NZD/USD is currently trading higher by 0.19% at 0.6503 during the time of writing, with the price travelling within a range of 0.6491 and 0.6514, battling against a strong daily downtrend that commenced from the 0.6680s, (which was a 50% retracement of the late March downtrend from the 0.69 handle. On Friday, the bird was the underperformer, falling from 0.6540 to 0.6489  to a three-week low. While U.S. data, (strong retail sales numbers), was a catalyst for a spike in the greenback on Friday, central bank's and geopolitics have been the main drivers on a fundamental basis for this pair. 

RBNZ and the Fed

The Reserve Bank of New Zealand, for instance, have set the Official Cash Rate at 1.5% and probably welcome a weaker bird considering the global macro backdrop and higher chances of another economic downturn. Analysts at ANZ Bank New Zealand expect the RBNZ to reduce the OCR by a further 0.25% and to provide strong forward guidance that rate hikes are a very distant prospect. On the flipside, the Federal Reserve has also shifted towards an easing bias and is expected by the market to cut interest rates later this year, but not as soon as this week. 

"With trade tensions likely to escalate, this Wednesday’s Fed meeting looks set to confirm market expectations - precautionary interest rate cuts are coming,"

analysts at ING Bank explained. 

This is where geopolitics is playing its co-piloting role in the cockpit, with the Fed at the wheel.  The analysts at ING bank note that the concerns about the economic implications of President Trump’s willingness to use trade tariffs in disputes with other countries mean that downside risks to growth are building. "On Wednesday, we expect the Fed to signal precautionary rate cuts are in the offing. Markets favour a 25bp rate cut in July with three additional rate cuts over the next twelve months."

NZD/USD levels

The bird has recovered marginally from a strong sell off and bears have rejected bullish attempts above 0.65 the figure. The 0.6480s guard a run to the Oct 2018 lows in the 0.6420s whereby a 127% extension comes in at the 0.6270s, in line with Autumn 2015 levels. Both long-term and short-term stochastics are oversold and some consolidation could be expected. On a break of 0.6550, a 50% mean reversion to 0.6580 could be on the cards. 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD remains depressed but off daily lows

The EUR/USD pair is recovering from a daily low of 1.1216, although holding in negative territory for the day. US preliminary Michigan Consumer Sentiment Index improved by less-than-anticipated in July, coming in at 98.4 vs. the 98.5 expected.

EUR/USD News

GBP/USD trading marginally lower daily basis but above 1.2500

The Pound gave back some of its Thursday’s gain on dollar’s relief. The GBP/USD pair broke a daily descendant trend line coming from June’s high and holds above it, leaving little room for sellers to act.

GBP/USD News

USD/JPY: bears pausing, still in control

Japanese National Inflation steady at 0.7%YoY in June. US Michigan Consumer Sentiment Index expected at 98.5 in July. USD/JPY corrective advance falling short of signaling an interim bottom in place.

USD/JPY News

Gold consolidates around $ 1440, eyes US data for fresh direction

Gold (futures on Comex) extends its side-trend around the 1440 mark into the mid-European session, having stalled its retreat from 2019 highs of 1454 near 1437 region.

Gold News

Something has spooked the Fed

We wish we knew what it is. Wild talk of the US joining Japan and Europe with zero or negative return on the 10-year is or should be very frightening.

Read more

MAJORS

Cryptocurrencies

Signatures


  •  
  •  
  •  
  •  
  •