NZ bounces of key support levels

28 October, 2016

NZ trade balance data rattled the NZ economy yesterday as it came in below expectations at -1.436B NZD. This was much larger than the market anticipated and reflected on worse than expected export data to 3.47B (3.52B exp), imports were also up to 4.90B helping to make the trade balance figures worse than expected. The market's reaction was bearish in nature, and came in the face of some USD weakness as well which meant a dip for the NZDUSD. Despite all of these movements it seems unlikely that the Reserve Bank of New Zealand will step in just yet - in fact with commodity prices looking all the more stable I would not be surprised to see them wait and see how things turn out just yet. What is apparent is that the NZDUSD continues to be overvalued and jaw boning no longer does the trick for market anymore, with very little action from the RBNZ in the past to back up the talk it's hard to even pay attention to it anymore.

The NZDUSD from a technical perspective is held up firmly on support levels at present, after shooting down the chart 0.7113 continues to be a major level, on the H1 chart we can see that the market is very aggressive at defending this level and this does reflect the current trend we are also seeing on the AUDUSD. A push through this level seems unlikely and I would need to see another daily candle break through and hold its ground against any movements lower for further bearish trend to be confirmed. Looking at the daily chart the 200 day moving average would be for me a very strong dynamic support level as well and something that should not be ignored. Trending upwards resistance is likely to be found at 0.7180, with this major level likely to be tested extensively if the trend plays out as expected.

Oil markets have also been key trenders after OPEC meetings continue to be back and forth, with very little in the way of concrete agreements and the entire OPEC board looking all the more fragmented after every meeting. If anything is to come from it, it may require further burning of cash reserves and an actual agreement, regardless Americas own oil producers are very much continuing to pump oil and are looking all the more likely to deliver production rather than vanish as was expected.

On the charts Oil hit resistance at 52.22 and has so far looked to trend further back down, as the market continues to look all the more likely to hold its ground at this level unless OPEC comes through with something. So far it has found support at 48.96 and is likely to trend lower and find further support levels which are likely at 46.46 and 43.47. So far movements/waves have been large, so I don't expect to see much in the way of ranging from oil markets which have very little history of doing so in recent times. 

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