NZD: Firms Alongside US Equities, US Tsys After Weak US Data
NZD/USD prints at $0.5970/75, the pair rose ~1% on Tuesday in its strongest day since mid-July.
- Weaker than expected US JOLTS Job Openings and Consumer Confidence saw broad based pressure on the greenback as US Equities firmed and US Tsy Yields ticked lower.
- NZD/USD rose ~1.5% from trough to peak, support came in ahead of YTD lows late in the European session.
- Despite yesterday's impressive rally, technically we remain in a strong downtrend. Bears look to break the low from 25 Aug ($0.5886) which opens $0.5841 (low from 10 Nov 22) and $0.5762, a Fibonacci projection. Bulls immediate focus is on the 20-Day EMA ($0.5992), a break through here opens high from Aug 10 ($0.6118).
- Cross assets; S&P500 rose ~1.5%, its strongest day since June, and 2-Year US Tsy Yields fell ~11bps. BBDXY fell ~0.4%. WTI was ~1.3% higher on Wednesday.
- On the wires this morning we have July Building Permits, there is no estimate and the prior read was 3.5% M/M.
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NZD: Muted Start, Q2 Employment Headlines Week's Docket
NZD/USD prints at $0.6150/60, the pair is little changed from opening levels in a muted start to the week's trade.
- The pair unwound the majority of its post BOJ losses in Friday's European session, USD/JPY reversed losses which spilled over into firmer risk sentiment.
- NZD/USD had found support ahead of $0.6120 and rose ~1% from session lows, marginally extending gains after the latest round of US data. Kiwi ticked lower in the NY session dealing in narrow ranges ending the session ~0.3% lower than opening levels.
- Bears target a break of the low from 28 July ($0.6121) which opens low from June 29 ($0.6051) and year to date lows ($0.5985). Bulls first target the 20-Day EMA ($0.6208), the 200-Day EMA comes in at $0.6227).
- AUD/NZD sits a touch above the $1.08 handle at the base of it's recent range.
- Cross asset wise; on Friday BBDXY fell 0.1% and S&P500 rose 1%. 10 Year US Tsy Yields were 3 bps lower.
- On the wires today we have the July ANZ Business Survey. The highlight of the week is the Q2 Employment Report on Wednesday, the unemployment rate is forecast to rise to 3.5% from 3.4%.
BONDS: NZGBS: Morgan Stanley See Smaller Than Average Month-End Extension
Morgan Stanley expect “the 1y+ NZGB index to extend by 0.003y in July, compared to an average July extension of 0.023y and an average month's extension of 0.029y. A total of about NZ$1 billion of issuance will affect the extension, and no bonds will fall out of the index.”
USDCAD TECHS: Resistance At The 50-Day EMA Remains Intact
- RES 4: 1.3427 High Jun 7
- RES 3: 1.3387 High Jul 7 and a key resistance
- RES 2: 1.3288 50-day EMA
- RES 1: 1.3249 High Jul 28
- PRICE: 1.3225 @ 16:42 BST Jul 28
- SUP 1: 1.3093 Low Jul 14 and the bear trigger
- SUP 2: 1.3084 1.618 proj of the Apr 28 - May 8 - May 26 price swing
- SUP 3: 1.3032 1.764 proj of the Apr 28 - May 8 - May 26 price swing
- SUP 4: 1.2992 50.0% retracement of the 2021 - 2022 bull leg
USDCAD remains in consolidation mode and is trading above key support at 1.3093, the Jul 14 low. Moving average studies continue to highlight a dominant downtrend. A break of 1.3093 would confirm a resumption of the medium-term bear cycle. This would open 1.3084 and 1.3032, Fibonacci projection points. On the upside, clearance of the 50-day EMA, at 1.3288, is required to highlight a possible short-term reversal.
