The New Zealand dollar retraced the previous day’s decline and is the best-performing currency against the greenback on Tuesday, and the kiwi-dollar may continue to push higher going into the Asian session as risk appetite feeds through the market. The NZD/USD remains 90pips higher on the day after moving nearly 112% of its average true range, but the lack of momentum to push above the 240-SMA at 0.6944 may keep the pair within a narrow range throughout the U.S. session as the 30-minute RSI falls back from oversold territory. Nevertheless, the economic docket is expected to reinforce an improved outlook for New Zealand as economists forecast retail spending to jump 1.4% in the fourth quarter, and the data is likely to spark increased volatility in the exchange rate as the RBNZ Governor Alan Bollard continues to see ongoing weakness in the domestic economy.
The Japanese Yen weakened across the board following a rise in risk appetite, with the USD/JPY rising to a high of 89.82, but the overnight rally appears to have stalled ahead of the 10-Day SMA at 89.91, which coincides with the 240-SMA on the 30-minute chart. The dollar-yen is slight higher on the day after moving only 65% if its daily ATR, and we may see price action hold along the 120-SMA at 89.40 going into the Asian session as the intraday RSI stabilizes and falls back from a high of 72. However, as risk trends continue to dictate price action in the foreign exchange market, we may see the low-yielding face increased selling pressures over the next 24 hours of trade as market participants move into higher risk/reward investments.
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To discuss this report contact David Song, Currency Analyst: dsong@fxcm.com
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