NZD vulnerable to a retest of 0.7035 - Westpac

Research Team at Westpac, suggests that while the macro-economic backdrop for the NZD remains positive, we received confirmation last week that inflation remains low.

Key Quotes

“Q3 CPI ran at just 0.2% yoy, which is well below the RBNZ’s 2.0% target midpoint, and thus highlights the need to cut the OCR again on 10 November to a record low 1.75%. Markets will be reluctant to buy the NZD with conviction within two weeks of a rate cut.

Technical: As with AUD, technical bias has flipped recently with broader patterns still in conflict. The failure to close above the H&S neckline (0.7250) leaves NZD vulnerable to a retest of 0.7035. Short-term resistance lies at 0.7190. In the interim, bias is to sell into rebounds with tight stops.”