NZD/USD underwater on robust greenback ahead of RBA announcements

The New Zealand dollar continued to bleed out and was testing below the 50% fibo retracement of the late Jan Fed demand as the greenback battled on and reclaimed positive territory overnight, extending its reversal of the FOMC losses.

NZD/USD fell from 0.6900 to 0.6870. Weighing on the G10's, U.S. yields were also bid, despite the risk appetite on Wall Street that took stocks into another positive close for the start of this week. 

"The kiwi dipped slightly against the USD overnight. Weaker US factory and durable goods orders offered little help to this pair with the kiwi likely to continue ranging sideways until Thursday’s NZ labour market data is released,"

analysts at ANZ Bank explained. 

The US 10yr treasury yield rose from 2.69% to 2.72% while 2yr yields rose from 2.51% to 2.53%. Analysts at Westpac noted that the futures markets continued to price little chance of any further Fed rate hikes in this cycle, with a 10% chance of a hike in December and a 10% chance of a cut.

Looking ahead

Meanwhile, for Asia, it is likely to be a quiet session once the data dump today is done, considering Today is the peak holiday for the lunar new year, with Singapore, Hong Kong, Malaysia, the Philippines and Indonesia joining mainland China, South Korea and Taiwan in closing markets. First of all, there is plenty of Aussie data to contend with, starting with retail sales and trade numbers ahead of the major event which is the RBA. 

"The RBA will surely need to revise down its projections for GDP growth given the weaker starting point...Furthermore, most activity indicators have weakened in recent months.  Some of this may reflect a weaker global trend in activity and financial market volatility dampening sentiment.  As such the RBA may see scope for sentiment and activity to recover from a global weak patch towards the end of last year.  However, there are also increased local risks to the economic outlook from an acceleration in the slide in residential building approvals and house prices,"  -

analysts at AMP GFX argued. 

NZD/USD levels

• Support 0.6870 
• Resistance 0.6960

Technically, the price remains within the same parameters, sliding below the double top around the swing highs of 0.6940. A continuation to the downside would first need to hold below the 50% fibo at 0.6880 with the confluence of S1. A keener level of support will be found at 0.6820 and the late Jan lows.