NZD: NZD/USD - Probing Long-Term Resistance Between 0.5850-0.5950

The NZD/USD had a range overnight of 0.5632 - 0.5669, Asia is trading around 0.5655. Risk consolidated its recent gains and the markets saw more breadth, the USD moved lower in response to a weaker ADP jobs report. The NZD reacted higher to the move in the USD and is attempting to put in a short-term low. The NZD does stand out as a vehicle to express a short in but should this bout of improved risk sentiment grow it will be tough for the NZD to ignore it and it could play catch up to the move at some point, if you feel this bounce in risk will fail and move back lower then the NZD remains a great way to express that. I still suspect any decent bounce will again attract sellers though. The first sell area on a pullback would be around 0.5750 and then the more pivotal 0.5850 area. Dips on the day toward 0.5630-40 needs to hold for the retracement to potentially extend.

• Bloomberg reports that, “First-Time Buyers Snap Up New Zealand Property After Price Slide. People signing up to buy their first property in New Zealand made up a record 27.7% of all transactions in the third quarter, according to the Cotality-Westpac NZ First Home Buyer Report.” 
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5600(NZD538m), 0.5800(NZD461m). Upcoming Close Strikes : 0.5380(NZD460m Nov 13) - BBG

Fig 1: NZD/USD Spot Daily Chart

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

• RES 4: 1.4274 High Apr 9  
• RES 3: 1.4200 Round number resistance
• RES 2: 1.4167 50.0% retracement of the Feb 3 - Jun 16 bear leg
• RES 1: 1.4151 Channel top drawn from Jul 23 low 
• PRICE: 1.4009 @ 16:31 GMT Nov 11
• SUP 1: 1.4001 Low Nov 10
• SUP 2: 1.3955 50-day EMA 
• SUP 3: 1.3888 Low Oct 29 and a key support  
• SUP 4: 1.3874 Bull channel base drawn from the Jul 23 low

USDCAD continues to trade below last week’s high. The latest pullback highlights a potential bearish development and a possible reversal. Resistance at the top of a bull channel, currently at 1.4151, remains intact. The bull channel is drawn from the Jul 23 low. The pair has pierced support at the 20-day EMA, at 1.4021. This exposes the 50-day EMA at 1.3955. For bulls, a break of the channel top would confirm a resumption of the uptrend.     

The AUD/USD had a range overnight of 0.6515-0.6538, Asia is trading around 0.6530. Risk consolidated its recent gains and the markets saw more breadth, the USD moved lower in response to a weaker ADP jobs report. The AUD/USD has found support and continues to consolidate above 0.6500. The AUD will be one of the main beneficiaries while this positive sentiment dominates the market. The AUD/USD needs a sustained push above the 0.6550 area for the focus to turn back toward the 0.6650/0.6700 year highs. Until then look for some range trading within 0.5490-0.5560.

• MNI AU - AUSTRALIA: Easing Cycle May Be Done. When updated for Q3 CPI, Q2 GDP and the RBA’s November projections, our simple policy reaction function based on the core inflation and output gaps is signaling no further easing. As trimmed mean inflation doesn’t return to the 2.5% band mid-point by the end of 2027 on current assumptions, there is a risk of monetary tightening.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6500(AUD1.37b), 0.6530(AUD 939m). Upcoming Close Strikes : 0.6520(AUD852m Nov 13), 0.6750(AUD2.17b Nov 14) - BBG
• Data/Event: Home Loans Value, RBA’s Brad Jones holds a fireside chat at the Association of Superannuation Funds of Australia Conference

Fig 1: AUD/USD spot Daily Chart

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