NZD/USD bouncing modestly after breaking short-term support at 0.7892 last week

FXstreet.com (Barcelona) - The NZD/USD was hit last week by the dovish comments from the RBNZ and stronger-than-expected U.S. data. The open this week counters last week’s action and some analysts are calling for a ST bounce.

NZD/USD likely to catch a bounce soon. But at which price level?

The NZD/USD cross has continued to get hammered on a short-term basis after the dovish commentary by the Reserve Bank of New Zealand’s Governor Wheeler and surprisingly strong data out of the U.S. – which ran counter to previous weeks’ trends.

This week brings more data to digest mostly out of the U.S. – culminating with the monthly jobs report out of the U.S. on Friday. Here’s the schedule of meaningful data releases for the week:

• Monday: NZD Terms of Trade Index (came out better-than-expected)
• Tuesday: NZD Commodities Prices; US ISM Manufacturing PPI; US Construction Spending
• Wednesday: US Trade Balance; US Fed Beige Book; Fed’s Dudley speaking
• Thursday: Fed’s Kocherlakota speaking; US ADP Employment Change; US Weekly Jobless Claims; US Non-Farm Productivity & Labor Costs; US Factory Orders; US ISM Non-Manufacturing PMI
• Friday: ; US Monthly Employment Report

Technical outlook for NZD/USD

Technicians are calling for a bounce in NZD/USD up to at least the 81 area. However, the cross will have to hold support at 0.7682 for a more bullish rally scenario – which has the NZD/USD moving up to 0.8295 – 0.8393 - to have a chance.

Flash: EUR/USD to move into 1.30-1.31 next - BBH

Our concern has been that the market is likely to be disappointed by the FOMC. There are many moving pieces and each is a potential source of disappointment. If the broad consensus is right and the Fed tapers in September, there can be a buy the rumor, sell the fact, behavior in the dollar and the opposite in US Treasuries.

The market may be disappointed if the Fed reduces its monthly purchases by $10 bln rather than $20 bln. The market may be disappointed by the allocation of its tapering between Treasuries and MBS. Lastly, of course, the market would be disappointed if the Fed waited to taper.

However, such disappointment, if it is to come, is likely after additional dollar gains. During this phase, we initially anticipate the euro to move into the $1.3000-$1.3100 area.
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Flash: Market making big bets on CAD short - HSBC

Net long USD positions increased by USD3.6bn on the week to a total long of USD15.5bn in the week ended 27 August, according to the CFTC futures positioning report, with HSBC reporting the largest shift being an increase in short CAD positions, while EUR longs increased slightly.
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