NZD/USD: downside pressures persist, eyes below 0.70 handle on break of 0.7050?
Currently, NZD/USD is trading at 0.7062, down -0.03% on the day, having posted a daily high at 0.7067 and low at 0.7062.
NZD/USD is under pressure, albeit in quiet markets with the number of holidays at the start of this week. The bird ranged between 0.7064 and 0.7086 overnight, although there is still a lack of closure in the local political situation and the bird might be expected to remain anchored for the time being.
"The economy starting to show a few late-cycle wobbles and the RBNZ expected to be a reluctant participant in the global removal of monetary policy stimulus, any pop higher is something we would sell into," explained analysts at ANZ.
Analysts at Westpac noted that the downside remains vulnerable, targeting the 0.7000-0.7050 area next, as long as the US dollar’s recovery continues. "In addition, NZ’s inconclusive election result and the ensuing government formation negotiations will probably continue to weigh on the NZD."
NZD/USD 1-3 month:
The analysts' longer-term outlook stays with the RBNZ and even if the Central Bank remains firmly on hold, as they expect, and the US dollar rises on the delivery of a Fed interest rate rise in December, then they argue that the NZD/USD could fall to 0.70 by year-end.
Meanwhile, from the calendar today, NZ electronic retail sales was a big miss.
- New Zealand Electronic Card Retail Sales (YoY) down to 2.9% in September from previous 4.4%
- New Zealand Electronic Card Retail Sales (MoM) registered at 0.1%, below expectations (0.7%) in September
NZD/USD levels
The bird is now testing the vicinity of 0.7055 as the June 1st low ahead of a break of the psychological 0.7000 level.
Very little out there supporting any kind of a correction let alone a reversal, but the Kiwi needs to get through 0.7240 as a major hurdle to confirm a significant correction of which a break of could open doors towards 0.7315.
0.7370 (the 9th Aug high) is the next key hurdle on the upside. A break there would solidify a bullish trend back towards 0.7522 and the YTD highs so long as there are closes on the 0.74 handle and beyond the post FOMC kneejerk highs of 0.7434.