27 Jan 2015
NZD/USD: Short squeeze off 0.74 reaches 0.7437
FXStreet (Bali) - NZD/USD is trading with a bid tone since the Asian get go, with a marginal break of 0.74 trapping late US sellers wrong-footed, and triggering an intraday short squeeze which has so far reached 0.7437.
Following last week's disappointing Q4 NZ CPI, market participants have kept the Kiwi under heavy pressure, expecting the RBNZ to explicitly drop its tightening bias, with even some investment banks calling for potential rate cuts as the Central Bank was caught up in a global disinflationary spiral amid a rate hike cycle. The realization by Governor Wheeler about the need to backtrack in interest rate levels could come anytime, and the market is preparing for such outcome accordingly.
According to Jim Langlands, Founder at FXCharts: "Following the recent, surprise BOC rate cut, many analysts now expect the RBNZ to temper their rate stance on Thursday morning, which comes an hour after the FOMC meeting. If they do strike a more dovish tone, then we are likely to see the Kiwi head lower towards the Nov 2011 low, at 0.7370, beyond which there is only minor support (20 Mar 2011 low: 0.7290) to hold the Kiwi up ahead of the 76.4% Fibo support and 17 Mar 2011 low seen at 0.7115."
Following last week's disappointing Q4 NZ CPI, market participants have kept the Kiwi under heavy pressure, expecting the RBNZ to explicitly drop its tightening bias, with even some investment banks calling for potential rate cuts as the Central Bank was caught up in a global disinflationary spiral amid a rate hike cycle. The realization by Governor Wheeler about the need to backtrack in interest rate levels could come anytime, and the market is preparing for such outcome accordingly.
According to Jim Langlands, Founder at FXCharts: "Following the recent, surprise BOC rate cut, many analysts now expect the RBNZ to temper their rate stance on Thursday morning, which comes an hour after the FOMC meeting. If they do strike a more dovish tone, then we are likely to see the Kiwi head lower towards the Nov 2011 low, at 0.7370, beyond which there is only minor support (20 Mar 2011 low: 0.7290) to hold the Kiwi up ahead of the 76.4% Fibo support and 17 Mar 2011 low seen at 0.7115."