NZD: Asia Wrap - NZD/USD Trades Sideways Around 0.5950, Awaits US CPI

The NZD/USD had a range of 0.5934 - 0.5947 in the Asia-Pac session, going into the London open trading around 0.5835, -0.07%. US stocks make new all-time highs again overnight, nothing stops this train. The NZD momentum higher has stalled in what should be the perfect zone to fade for bears, the price action for the USD though gives me pause. US CPI tonight will have a say in whether this area holds or not. CFTC Data shows light positioning in a market that is struggling for a strong trend as we move back into the middle of the recent 0.5800-0.6100 range.

• MNI AU - RBNZ Still Sees 2.5% OCR Trough Depending On Data: Governor Hawkesby noted at the Financial Services Council conference today that the economy has looked better in July and there are signs that growth will pick up in H2, as was expected. He also stuck with the August projection that the OCR will trough at 2.5% but said that “could occur faster or slower depending on how the economic recovery evolves”, ie remains data dependent. The RBNZ expects Q2 GDP to fall 0.3% q/q (released September 18) but then recover to +0.3% in Q3 and +0.8% in Q4. 25bp rates cuts in October and November are expected.
• Friday sees August BusinessNZ manufacturing PMI which returned above the breakeven-50 mark in July after two months of contraction. August card transaction data also prints on Friday. The retail data is showing some recovery in spending but it remains soft. It underestimated nominal Q1 & Q2 retail sales substantially.
• AUD/NZD range for the session has been 1.1126 - 1.1140, currently trading 1.1135. The Cross is consolidating above 1.1100, dips back towards 1.1000/1.1050 should be supported now. A break above the multiple highs towards the 1.1200 area is needed to regain the momentum higher.

Fig 1: NZD/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P