The NZD continues to fall due to increasing expectations of interest rate cuts by the RBNZ, disappointment over China's lack of significant economic stimulus measures, this has also followed a cut in the loan prime rates by the PBoC, while weakness in the commodity sector didn't help.

  • The NZD/USD declined for the fourth straight session, closing down 0.37% to 0.5957 and has now dropped 4.35% from the June highs.
  • There has been weakness in equities post the NY close after Tesla (down 9% in After hours trading) reported an earnings miss which could weigh on risk currencies including the NZD.
  • The pair trades well under all key EMAs, indicating a bearish bias. Technical indicators show continued selling pressure, with RSI at 31 and MACD showing increasing negative bars. A break back above resistance at 0.6000 would be needed to break the short-term trend, while next major support is at 0.5940 (April 1 lows)
  • The OIS market pricing is little changed with a 49.6% chance of a cut in August, the market has priced in a full cut by October and 71bps of cuts into year-end.
  • The NZ-US 2yr swap spread made new lows on Tuesday, hitting -7bps we trade just off those levels now at -5.5bps.
  • Expiries: 0.6300 ($128.57m) for July 24th NY cut
  • The calendar is light on for the remainder of the week.

NZD: NZD/USD Falls on Rate Cut Expectations, China Growth

Last updated at:Jul-23 21:59By: Sam Hunter

The NZD continues to fall due to increasing expectations of interest rate cuts by the RBNZ, disappointment over China's lack of significant economic stimulus measures, this has also followed a cut in the loan prime rates by the PBoC, while weakness in the commodity sector didn't help.

  • The NZD/USD declined for the fourth straight session, closing down 0.37% to 0.5957 and has now dropped 4.35% from the June highs.
  • There has been weakness in equities post the NY close after Tesla (down 9% in After hours trading) reported an earnings miss which could weigh on risk currencies including the NZD.
  • The pair trades well under all key EMAs, indicating a bearish bias. Technical indicators show continued selling pressure, with RSI at 31 and MACD showing increasing negative bars. A break back above resistance at 0.6000 would be needed to break the short-term trend, while next major support is at 0.5940 (April 1 lows)
  • The OIS market pricing is little changed with a 49.6% chance of a cut in August, the market has priced in a full cut by October and 71bps of cuts into year-end.
  • The NZ-US 2yr swap spread made new lows on Tuesday, hitting -7bps we trade just off those levels now at -5.5bps.
  • Expiries: 0.6300 ($128.57m) for July 24th NY cut
  • The calendar is light on for the remainder of the week.

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