NZD/USD: getting hit as markets adjust to RBNZ and Trumped fuelled dollar strength

Currently, NZD/USD is trading at 0.7204, up 0.10% on the day, having posted a daily high at 0.7207 and low at 0.7197.

US dollar index rises again but fails to hold above 99.00

NZD/USD has been sold off again overnight as the greenback firms up and knocks the bird off its perch just below the 0.74 handle and has dropped lower within the aforementioned range or which lows are where spot is oscillating in early Asia. 

Meanwhile, the RBNZ cut the Official Cash Rate (OCR) by -25bp to 1.75%, dropped its explicit easing bias and effectively signalled the end of the easing cycle, explained analysts at TD securities who noted that this cut was widely expected, well priced. However, adding, " Indeed, they are hinting that the economy is coping well with the exchange rate at current levels and sending the signal that no further cuts are needed. We see the cash rate remaining at 1.75% throughout 2017. Our full thoughts are here.

RBNZ Assistant Gov. McDermott later in the day highlighted that the Bank is worried about the impact of the NZD, which was seen as ‘too high’. He reiterated that the Bank will cut if needed and that the risk for rates is still to the downside.  Mention of the word ’intervention’ pressured the NZD as well (although was also mentioned in Wheeler’s press conference)."

Market wrap: antipodeans sold off - Westpac

Analysts at Westpac offered their outlooks, short and medium term:

"NZD/USD 1 day: Has lost its bullish momentum and targets 0.7110 during the days ahead.   .

NZD/USD 1-3 month:  Targets 0.6950 or lower as long as the RBNZ cuts to 1.75% in November and the Fed tightens to 0.625% in December, as we expect."

NZD/USD levels

Spot is presently trading at 0.7205, and next resistance can be seen at 0.7207 (Daily High), 0.7211 (Daily 100 SMA), 0.7241 (Hourly 20 EMA), 0.7247 (Daily 20 SMA) and 0.7266 (Daily Classic S1). Support below can be found at 0.7197 (Daily Open), 0.7197 (Daily Low), 0.7196 (Weekly Classic S1), 0.7196 (Daily Classic S2) and 0.7177 (Yesterday's Low).