NZD: NZD/USD - Testing 0.6000 Support
The NZD/USD had a range overnight of 0.5989 - 0.6017, Asia is trading around 0.6000. The NZD/USD finally found some demand just below 0.6000 and consolidated overnight after moving over 1% lower in reaction to the new set of tariffs sent out. Unlike the price action over the NFP print the USD is reacting to this news and challenging a short market. We have seen this ‘movie’ before and it normally ends with the USD faltering and moving lower again, is this time different ? If there is a deeper correction in risk and the USD can squeeze higher then the risk to the NZD is a move back towards the 0.5850/0.5900 area.
- MNI RBNZ Decision - The RBNZ is expected to hold policy rates steady tomorrow. Little is pricing in from a market pricing standpoint, while the majority of sell-side analysts see no change. Those looking for a move see a 25bps cut next week, but are in the minority. There remains much uncertainty around the NZ economic recovery, but the central bank probably doesn't need to be urgent and act now. The tick up in inflation expectations also warrants an on hold outcome at this meeting.
- The NZD/USD has lost all its upward momentum and is back testing its support around the 0.6000 area. If risk has a deeper correction and the USD can find some upward momentum the risk is a move back towards 0.5850/0.5900.
- Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.6075(NZD519m July 9), 0.6000(NZD407m July 10), 0.6025(NZD373m July10).
- CFTC Data shows Asset Managers have reduced their newly built longs in NZD +8515, the Leveraged community reduced their short last week -8424.
Fig 1: NZD/USD Spot Hourlly Chart
Source: MNI - Market News/Bloomberg Finance L.P
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- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 141.48/142.95 - High May 2 / High Apr 7
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We've just published our UST Issuance Deep Dive - Download Full Report Here
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