Asia Pacific Market Open Talking Points
- New Zealand Dollar may extend uptrend after RBNZ capital buffers review
- Canadian Dollar soared as BoC cooled rate cut bets, British Pound rallied
- Asia stocks may climb, pressuring the anti-risk Japanese Yen vs its FX peers
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New Zealand Dollar Gains as RBNZ Outlines Path for Tighter Capital Buffers
The New Zealand Dollar is gaining early into Thursday’s trading session after the RBNZ released its review on capital buffer requirements. The central bank outlined the course for small and large lending institutions to raise capital buffers over the course of 7 years. As a result, the RBNZ estimates that the changes could amount to borrowing costs rising by 20.5 basis points after they are incorporated into the economy.
This helped extend the rally in NZD/USD from Wednesday’s trading session as the sentiment-linked currency followed Wall Street higher. Markets remain fixated on back and forth in US-China trade war news. On Tuesday, stocks gapped lower on the possibility that an interim agreement between the world superpowers could be delayed until after the 2020 US Presidential Election.
NZD/USD Rallies on RBNZ Bank Capital Buffer Review
US Trading Session:
Over the past 24 hours, US President Donald Trump rekindled risk appetite as he said that negotiations are going “very well”. The US and China are seemingly coming to terms on an amount of tariffs that could be rolled back. This is a key issue that latter has made as a sticking point in talks. As trade tensions between Washington and with Europe and South America simmer, the S&P 500 closed about 0.63 percent higher.
The anti-risk Japanese Yen and similarly-behaving Swiss Franc underperformed against their major peers. Meanwhile, the Canadian Dollar soared as the Bank of Canada left rates unchanged at 1.75% and poured cold water on rising speculation of near-term easing. The British Pound also soared, gaining as latest polling data showing the UK Conservative Party gaining a lead, underpinning Brexit deal bets in the near-term.
Thursday’s Asia Pacific Trading Session:
Asia Pacific markets may follow Wall Street higher, catching up on the latest optimism from investors about a US-China trade deal. That may further propel buying pressure in the sentiment-linked New Zealand Dollar and Australian Dollar. The anti-risk Japanese could weaken as USD/JPY rises. Although the ongoing back and forth in trade updates makes for unpredictable conditions ahead of the December 15 tariff deadline.
New Zealand Dollar Technical Analysis
NZD/USD continues its upside reversal in the aftermath of a breakout above an Ascending Triangle. This is typically a bullish chart pattern that could pave the way for a revisit to levels last seen in June and July. Near-term resistance is ahead at 0.6592. Otherwise, a turn lower paves the way for a retest of former resistance which could stand in the way as support at 0.6424 – 0.6465.
Chart of the Day – NZD/USD
Chart Created Using TradingView
FX Trading Resources
- See how the NZD is viewed by the trading community at the DailyFX Sentiment Page
- See our free guide to learn what are the long-term forces driving the US Dollar
- See our study on the history of trade wars to learn how it might influence financial markets!
--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
