We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides Download
EUR/USD
Bullish
GBP/USD
Bearish
USD/JPY
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Bitcoin
Bullish
More View more
Real Time News
  • Traders should know how to confidently approach, enter and exit both Bull or Bear markets. Need some insight into it? Get it from @nickcawley1 here: https://t.co/GhvvFrB3gz https://t.co/70dQeBCONm
  • The #ASX 200 stock index hit record highs this year but those days seem unlikely to return anytime soon as even equity buckles before the #coronavirus outbreak. Get your market update from @DavidCottleFX here: https://t.co/HlZhPBsZ6X https://t.co/Rvfnt44wTm
  • Housing data may be more heavily scrutinized in 2020 as softer global growth places more stress on the consumer to keep the American economy afloat. Get your market update from @ZabelinDimitri here: https://t.co/ms4EGbJ1WF https://t.co/EOwX7DLGZZ
  • What are the truths and lies of #forex trading regardless of your #tradingstyle here: https://t.co/uF75VPzstr https://t.co/k1USOdlHiR
  • How can traders avoid #FOMO in trading? Start by implementing a well-heeled plan taking only four hours per week. Get your insight from @JStanleyFX here: https://t.co/vwUShQPc27 #tradingstyle https://t.co/6l6t02a61R
  • The $NZD may fall versus the Australian Dollar on a more-dovish #RBNZ down the road. “Risk-neutral” AUD/NZD has been maintaining composure as stocks sell off on coronavirus fears. Get your NZD market update from @ddubrovskyFX here: https://t.co/3OtpuHRHBv https://t.co/wYiiLdtmur
  • #Copper prices are rapidly approaching a 17-year uptrend as concern about the #coronavirus threatens to thwart global stabilization and demand for the growth-oriented commodity. Get your market update from @ZabelinDimitri here:https://t.co/2RbfvVZOxX https://t.co/m3EJI8sksF
  • My trading video for the weekend: 'S&P 500, Yen, Gold - A Lot Rides On Weekend Appeals and Monday's Open' https://www.dailyfx.com/forex/video/daily_news_report/2020/02/29/SP-500-Yen-Gold---A-Lot-Rides-On-Weekend-Appeals-and-Mondays-Open.html?ref-author=Kicklighter&QPID=917719&CHID=9
  • The $USD technical outlook is still pointing higher against the Malaysian Ringgit and Philippine Peso following near-term weakness. What is the road ahead for USD/MYR and USD/PHP? Find out from @ddubrovskyFX here: https://t.co/IQUjFt8CVE https://t.co/8rSTyzBf9U
  • That is....that is not good. I am frankly shocked they let a number like that print https://t.co/HauBmn8w3X
NZD/USD May Rise to Options-Derived Resistance on RBNZ

NZD/USD May Rise to Options-Derived Resistance on RBNZ

2018-05-09 03:30:00
Daniel Dubrovsky, Analyst
Share:

New Zealand Dollar Talking Points:

  • New Zealand Dollar is priced in for some intense price action over the coming days
  • The currency may rise on the RBNZ rate decision before falling on April’s US CPI
  • NZD/USD downside momentum is slowing warning that prices may turn higher next

Just started trading NZD/USD? Check out our beginners’ FX markets guide!

The New Zealand Dollar might be getting ready to push higher against its US counterpart and prices may pause on near-term options-derived resistance. Looking at the table below, NZD/USD one-day implied volatility is at its highest since the lead-up to the New Zealand minority coalition government announcement back in October 2017. The similar one-week measurement is at its largest since March. A couple of key event risks that are coming up may explain why intense price action is priced in.

Implied Volatility and Market Range for the FX Majors

FX Majors Implied Volatility and Market Range

The immediate one is the upcoming RBNZ monetary policy announcement. There, rates are widely anticipated to remain unchanged at 1.75% which means the central bank’s forward guidance could be what fuels New Zealand Dollar volatility. On this front, there may be scope for Kiwi Dollar gains if their new governor Adrian Orr reemphasizes that long-term inflation expectations are still anchored to 2 percent.

Senior Currency Strategist Ilya Spivak will be covering the RBNZ rate decision. Join the webinar and follow NZD/USD’s reaction to it LIVE.

Looking at the immediate chart below, you can see that NZD/USD’s decline since April has also been accompanied with decreasing local inflation estimates. For example, New Zealand’s 10-year breakeven rate, which basically shows the market’s implied inflation rate, has been steadily declining since then. Simultaneously, RBNZ rate expectations 2 years out have also been on the fall.

Fading New Zealand inflation expectations

Just yesterday, NZD/USD declined as RBNZ’s 2-year inflation expectations survey fell to 2.01% in the second quarter from 2.11% prior. Keep in mind that the views expressed in the poll do not represent the central bank’s forecasts. Thus, if Adrian Orr continues to echo the tone that inflation is going higher in the long-run, then we might see some of those pessimistic views on inflation bets unwind and potentially boost the Kiwi Dollar.

For an alternative view of the New Zealand Dollar on the RBNZ rate decision, check out Analyst David Cottle’s article on what he expects on the announcement.

However, gains may not last for long due to the close proximity of Thursday’s US inflation report. There, the headline rate is anticipated to rise to 2.5% y/y in April from 2.4% prior. Signs of rising price pressures could fuel hawkish Fed monetary policy expectations and thus boost the US Dollar. Such an outcome also bodes ill for the New Zealand Dollar which may presumably will no longer boast the highest yield of the FX majors spectrum.

NZD/USD Technical Analysis: Ready for a Bounce?

On a daily chart, NZD/USD finds itself sitting squarely on the December 20th low around 0.6952. The pair has been in an aggressive downtrend since mid-April but there is a warning sign that prices could push higher soon. Positive RSI divergence shows that momentum to the downside is slowing. With that in mind, let us take a look where the pair may go.

From here, immediate resistance is a combination of the “day range high” of 0.7017 and a near-term descending line (blue line on chart below). A push above that exposes the “week range high” at 0.7054. If NZD/USD falls then it could be held up by the “day range low” at 0.6909. A push below that exposes the “week range low” at 0.6872.

NZD/USD daily chart showing positive RSI divergence

NZD/USD Trading Resources:

--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

To receive Daniel's analysis directly via email, please SIGN UP HERE

https://twitter.com/ddubrovskyFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.