Trade balance data weighs on NZD

26 September, 2017

Trade balance data weighs on NZD

The New Zealand has been the weakest trade for Monday, but that was in part to markets holding off on economic data coming out the following morning. We now know why as trade balance data was much worse than expected at -1.24B (NZD) and exports dipped to 3.69B (4.63B prev). This will certainly raise eye brows for NZD traders but also the Reserve Bank of New Zealand who always takes a very careful approach when dealing with trade balance data. Expectations are now that the RBNZ may in fact look to hold off further rate rises if we see further weakness, especially in the labour market. A drop in the NZDUSD however may assist the RBNZ at the end of the day as it feels that at present it is overvalued when sitting in the 70 cent range and would prefer something in the low 60s; at a more traditional trade weighted value.

For the NZDUSD bulls the time may be up on the good run. It has been the case of a weaker USD helping drive commodity currencies higher and the NZD has benefited greatly accordingly. However, dollar bears have eased off and as a result the weakness in the NZD is starting to show. Thus far the 20 day moving average has acted as dynamic support for movements lower on the daily chart, but I feel it can't slow it much further. Support levels from a price standpoint can be found at 0.7219 and 0.7157; these levels are like to come under stress and a further extension below 0.7157 would pave the way for more aggressive bearish action. In the event that markets turned upwards I would be surprised but expect resistance to be found accordingly at 0.7323 and 0.7400, with 0.7400 likely to be the strongest resistance level at present in the market. Traders, however should also be aware that the RBNZ rate decision is due out Wednesday early morning GMT time and will carry some weight with the market, but it's extremely unlikely the rates will move at this time - the statement will be of the biggest impact.

Oil has jumped up the charts in an unprecedented move for a Monday trading day. The jump to resistance at 52.10 is a clear sign that oil has finally crossing back into positive territory. This should come as no surprise as demand has increased globally and the production cuts from OPEC are helping to reduce the glut that plagued the market over the last two years.

For traders looking to fade the bulls on this trade the next levels to target are 54.04 and 55.12 with the 55.12 zone likely to be a very strong candidate for bears to push the market or traders to look to take profit. It would be unexpected to see sharp falls from the current position unless we saw some major dollar strengthening. However, it seems to be a mixed bag for the dollar at present. 


Source link  
Global equities hit by bearish pressure

Global markets took a sharp U-turn as the markets were in turmoil on the back of large crypto currency sell offs caused by regulation fears and a crackdown...

Dollar stabilizes after four days slide

The greenback’s sell-off paused early Tuesday after touching its weakest level since January 2015. Traders have been selling the buck across the board...

US equities hit another record high

The US markets have continued their hectic pace this year as the S&P 500 reached new highs on the back of economic figures. These figures showed...


Fixed income markets to dominate FX

The outstanding performance for equities which sent many major indices to record highs may have just paused. Asian stocks were trading broadly lower...

How longer the tired bull will keep running?

Led by Wall Street, global equity markets continued to enjoy one of their best starts in eight years. The Japan’s Nikkei 225 marched to a new 26-year high...

Critical week for dollar after a fragile start

After having the worst annual performance since 2003, the dollar continued to struggle in the first trading week of 2018. The dollar index fell to...


Robust economic growth

Equity investors across the globe are finding no reasons to take profits after an excellent performance in 2017. Asian stocks are trading at record highs after...

FOMC minutes - Will dollar bulls attack?

Investors kicked off 2018 on a positive note sending U.S. stocks to fresh highs on the first trading day. The optimistic approach on day one was...

Equities reaction on tax breakthrough

Asian markets woke up on Thursday to the news that Republicans had passed the long-awaited tax bill. President Trump is now just a pen...

  


Share: