NZD/USD: where now from here? 0.6820 to give today?

Currently, NZD/USD is trading at 0.6840, down -0.12% on the day, having posted a daily high at 0.6851 and low at 0.6833.

New Zealand Business NZ PMI dipped from previous 57.8 to 56.8 in May

NZD/USD is choppy in a narrow range today so far in early Asia. The RBNZ got a lot of attention yesterday and has dominated the commodity bloc, weighing on the outlook for the bird's peers as well.

"The guidance from the Bank that “monetary policy will remain accommodative for a considerable period” and that “numerous uncertainties remain and policy may need to adjust accordingly” was at odds with the more hawkish views of many commentators," explained analysts at Rabobank.  

"There are various scenarios that could explain why there appears to be a divergence of view between the central bank and the market consensus. It is our view that the central bank is justified in its warnings of ‘major challenges’ over ‘ongoing surplus capacity and extensive political uncertainty’ are justified. That said, it is possible that the central bank saw an opportunity to take advantage of the market’s more hawkish view to verbally manipulate the NZD lower." 

Meanwhile, the greenback has been unable to commit to convincing bid in any way, even on the back of impressive data overnight, albeit second tier. The PPI has set up an inflationary environment ahead of tomorrow's CPI. We also have retail sales from the US calendar tonight. 

NZD/USD levels

The 0.6820/30 area is a level of support.  Below 0.6700 we have the 0.6675 level as the 29th May 2016 high. 0.6920/30 is the immediate resistance area. The 20-d sma is at 0.6914 as well. A break through the midpoint opens up the 0.7000level. The 17th April highs of 0.7035 are next up ahead of 0.7060/70, being a further key resistance area through the 200-d ema (0.7047). The double bottom at 0.7130 as the mid-Feb lows could be a strong area of resistance.

Analysts at Westpac explained that the Fed’s tightening cycle plus US fiscal expansion should maintain upside pressure on US interest rates and the US dollar, pushing NZD/USD below 0.6700. "However, local factors are supportive: a strong NZ economy and higher dairy prices, through the RBNZ’s neutral stance takes away a lot of shine."