- NZD/USD rebounds to two-day highs after RBNZ rate hike.
- The entity agrees with market forecasts of a rate hike of 50 basis points, and indicates the convenience of further tightening.
- Declines in US Treasury yields resume, lightly bid stock futures put antipodal downward pressure.
- The Chinese premier’s comments and a softer New Zealand PPI provoked kiwi sellers.
The NZD/USD has staged a 50 pip rally following the announcement by the Reserve Bank of New Zealand that it has raised interest rates by 50 basis points to 3.0%. The pair has reached a two-day high at 0.6383trading at time of writing above 0.6364, gaining 0.27% daily.
Although the RBNZ met market expectations, the optimism from the quarterly Monetary Policy Statement seems to have favored the NZD/USD bulls.
However, fears surrounding China, Europe, as well as a cautious mood ahead of key data/events, challenge buyers of the Kiwi pair of late.
Chinese Premier Li Keqiang made remarks reported by the Communist Party’s flagship newspaper, People’s Daily, urging local officials in six key provinces that account for around 40% of the country’s economy to step up pro- increase. On Wednesday, President Xi Jinping and the state planner from the National Development and Reform Commission (NDRC) signaled they were ready to take more measures to combat recession fears.
Given the dragon nation’s trade ties to the Pacific, as well as being the world’s largest commodity consumer, any downside for Beijing weighs on NZD/USD.
As sentiment fades, 10-year US Treasury yields fade previous day’s bounce, and SP500 Futures retreat from a four-month high.
Having witnessed the initial reaction to the RBNZ’s moves, NZD/USD traders will be looking to Governor Adrian Orr’s comments for further momentum. Later in the day, July US Retail Sales will be released, expected to be 0.1% vs. 1.0% prior, as well as Federal Open Market Committee (FOMC) meeting minutes, to get clear directions. Headlines about China and the recession will also be important.
NZD/USD Technical Analysis
Barring a daily close below the monthly support line around 0.6260 at press time, NZD/USD buyers remain hopeful. However, a downtrend line resistance near 0.6460 at the latest defies the upside momentum.
|Last Price Today||0.6378|
|Today’s Daily Change||0.0031|
|Today’s Daily Change %||0.49|
|Today’s Daily Opening||0.6347|
|20 Daily SMA||0.63|
|50 Daily SMA||0.6267|
|100 Daily SMA||0.643|
|200 Daily SMA||0.6615|
|Previous Daily High||0.6393|
|Previous Daily Minimum||0.6317|
|Previous Maximum Weekly||0.647|
|Previous Weekly Minimum||0.6228|
|Monthly Prior Maximum||0.633|
|Previous Monthly Minimum||0.6061|
|Daily Fibonacci 38.2%||0.6346|
|Daily Fibonacci 61.8%||0.6364|
|Daily Pivot Point S1||0.6312|
|Daily Pivot Point S2||0.6276|
|Daily Pivot Point S3||0.6235|
|Daily Pivot Point R1||0.6388|
|Daily Pivot Point R2||0.6428|
|Daily Pivot Point R3||0.6464|
Source: Fx Street