NZD: Asia Wrap - NZD/USD Fails Above 0.6000 As The USD Bounce Builds Momentum
The NZD/USD had a range of 0.5918 - 0.5966 in the Asia-Pac session, going into the London open trading around 0.5925,-0.70%. The NZD has remained under pressure after gapping lower on the Asian open. The market is digesting the implications of a longer and more sustained US involvement in the conflict and how Iran might react to this, potentially blocking the Strait of Hormuz.
- (Bloomberg) - “New Zealand’s dollar is particularly vulnerable in the event of a haven rally in the US currency should the conflict between Iran and Israel pose constraints on oil supply, according to Bank of America Corp.”
- “Among Group-of-10 commodity currencies, the Kiwi “is the only energy importer and most vulnerable if Middle East oil supply is impacted more severely,” wrote Bank of America.”
- The NZD could not get back above 0.6000 on Friday and this morning has seen another wave of selling as the market digests the weekend's news and the implications of what further US involvement might imply.
- Technically while the support around 0.5850 holds in NZD/USD it is still in an uptrend but should risk start to come under more significant pressure the market is likely to test this.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5830(NZD300m June 23). Upcoming Close Strikes : 0.5690(NZD621m June 25)
- CFTC Data showed Asset managers paring back their shorts slightly once more over the week, the leverage community did likewise.
- AUD/NZD range for the session has been 1.0797 - 1.0828, currently trading 1.0810. The cross is struggling to get any momentum back above 1.0800 for now, it needs to hold above here and start extending higher to put a higher low in place. The longer it fails to extend higher the more likely it begins to drift lower again, a break sub 1.0750 will see downward momentum return.
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
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