23 Jul 2015
NZD/USD bounces on relief of just 25bps on RBNZ
FXStreet (Guatemala) - NZD/USD is currently trading at 0.6621 with a high of 0.6658 and a low of 0.6561.
NZD/USD has dropped a little on the release of the of the RBNZ cutting by 25bps and with a dovish rhetoric in the statement that the Kiwi level being unjustified while a further drop is necessary in the price and further easing "seems likely".
Prior to the release, NZD/USD had been recovering within the descending channel from the end of April's business, contained by the resistance however at 0.6644 but off the lows of 0.6498. This channel targets 0.6417 May 2009 highs and 0.6035, Jan 2009 highs. Also, prior to the release, support was at 0.6542/0.6500 and resistance was at 0.6620 (current level time of writing)/0.6710.
The greenback was giving some room back across the board this week and there was nothing bullish in the NZ economy that was offering the bird any support but in today's overnight session, the commodities took a further hit and the greenback was recovering across the board.
The RBNZ was expected to cut by 25bps but there had been a slight consensus for a deeper cut of 50bps, so hence we are a bid overall so far, but leaving room for a correction to the downside. The currency is very soft and imports and recessionary headwinds may not be favourable to accommodate such an aggressive move in respect to inflationary risks in a poor performing economy.
Westpac economists have forecasted rates dropping as low as 2.00% by year end while the RBNZ shadow board forecasts 2.5% for the same time frame across September and December's meetings. The analysts at Westpac say they are targeting as low as 0.6400 this week.
"The only obvious argument for a near term bounce is positioning – CFTC reports show NZD/USD futures speculative positioning is at a record low, warning of a sharp short-squeeze eventually.
NZD/USD has dropped a little on the release of the of the RBNZ cutting by 25bps and with a dovish rhetoric in the statement that the Kiwi level being unjustified while a further drop is necessary in the price and further easing "seems likely".
Prior to the release, NZD/USD had been recovering within the descending channel from the end of April's business, contained by the resistance however at 0.6644 but off the lows of 0.6498. This channel targets 0.6417 May 2009 highs and 0.6035, Jan 2009 highs. Also, prior to the release, support was at 0.6542/0.6500 and resistance was at 0.6620 (current level time of writing)/0.6710.
The greenback was giving some room back across the board this week and there was nothing bullish in the NZ economy that was offering the bird any support but in today's overnight session, the commodities took a further hit and the greenback was recovering across the board.
The RBNZ was expected to cut by 25bps but there had been a slight consensus for a deeper cut of 50bps, so hence we are a bid overall so far, but leaving room for a correction to the downside. The currency is very soft and imports and recessionary headwinds may not be favourable to accommodate such an aggressive move in respect to inflationary risks in a poor performing economy.
Westpac economists have forecasted rates dropping as low as 2.00% by year end while the RBNZ shadow board forecasts 2.5% for the same time frame across September and December's meetings. The analysts at Westpac say they are targeting as low as 0.6400 this week.
"The only obvious argument for a near term bounce is positioning – CFTC reports show NZD/USD futures speculative positioning is at a record low, warning of a sharp short-squeeze eventually.