News & Analysis at your fingertips.

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. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bullish
Oil - US Crude
Mixed
Wall Street
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
Gold
Mixed
GBP/USD
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
USD/JPY
Mixed
More View more
Real Time News
  • USD/CAD put in a massive reversal last week on the back of the FOMC. Does the reversal have staying power? Short-term bullish momentum keeps the door open for higher-highs. Get your market update from @JStanleyFX here:https://t.co/vE1r5wF9VD https://t.co/bdHOJyxW0R
  • Commodities Update: As of 18:00, these are your best and worst performers based on the London trading schedule: Silver: 0.42% Oil - US Crude: 0.01% Gold: -0.09% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/0KdSEbz8n1
  • US President Biden: - I expect a vote on infrastructure before the fiscal year ends - If the infrastructure bill and budget bill do not come together, I will not sign
  • US President Biden: - I am unsure if I have enough support for reconciliation - The infrastructure investments are a significant down payment on my priorities
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 89.85%, while traders in France 40 are at opposite extremes with 70.44%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/qzsSsxLWTt
  • Banxico isn't scared surprise 25 bps rate hike, not sure many were expecting that quick move down in $USDMXN, return to support ~19.700 https://t.co/eirgp5QLa1
  • US President Biden: - There will be no rise in the gas tax - There are no fees for electric vehicles - This agreement is a significant step toward competing with China
  • US President Biden: - The infrastructure agreement will result in the creation of millions of jobs in the United States - Expenditures will bring long overdue investments
  • USD/MXN sharply lower following a surprise 25 bps rate hike from Banxico $USDMXN https://t.co/muUToFz4uk
  • A surprise 25bp rate hike from the Mexican Central Bank. Sharp $USDMXN drop https://t.co/kuqxcdpGmu
New Zealand Dollar Braces as Emerging Markets, Stocks Vulnerable

New Zealand Dollar Braces as Emerging Markets, Stocks Vulnerable

Daniel Dubrovsky, Strategist
Please add a description for the image.

New Zealand Dollar Fundamental Forecast: Bearish

  • New Zealand Dollar depreciated across the board amidst global tightening bets as stocks fell
  • Weakness may persist, NZ business manufacturing PMI may disappoint but key risk is external
  • Emerging markets, stocks seem vulnerable: Brazilian elections, IMF outlook and trade wars?

We just released our 4Q forecast for equities, which may impact NZD, in the DailyFX Trading Guides page

The sentiment-linked New Zealand Dollar succumbed to intense selling pressure during the first week of October as risk trends dominated headlines. The currency did not have much to listen to in regards to key local economic data which was rather sparse. Instead, US government bond yields soaring to multiyear highs helped suppress the relative appeal of stocks which boded ill for NZD as traders bought into the US Dollar.

Next week may offer a similar scenario with New Zealand Business Manufacturing PMI the notable domestic economic event risk. Given that the RBNZ is open to both a rate cut and hike as its next move, this places additional weight on how data performs. We have seen dovish monetary policy bets wane in recent weeks but those may be reignited should the survey disappoint given the negativity in business confidence.

NZD/USD is arguably more vulnerable to external developments ahead with a notable event risk being the first round of Brazil’s presidential election which takes place over the weekend. There, Jair Bolsonaro of the PSL and Fernando Haddad of the PT may tie during the first round. In the end, a victory for the former may offer a more favorable response from local stock markets but with lasting consequences.

This may offer a temporary lift to the MSCI Emerging Markets ETF which fell dramatically in the past week. Looking at the chart below, we can also see the close relationship between the index and the New Zealand Dollar. Thus a Bolsonaro win could potentially send the New Zealand Dollar higher should we see some confidence from developing nations as a result.

MSCI Emerging Markets ETF Daily Chart

New Zealand Dollar Braces as Emerging Markets, Stocks Vulnerable

Chart created in TradingView

If we do see some gains in NZD on that, those may prove to be short lived however. The rest of the week also contains the IMF presenting its World Economic Outlook. Director Christine Lagarde has already expressed her concerns about trade wars and their consequences to global growth. More of the same reiteration there may upset the markets which would thus threaten to add losses back to the New Zealand Dollar.

Speaking of trade wars, curiously it was discovered last week that major US companies such as Amazon were a victim of a Chinese chip attack. Relationships between President Donald Trump and Xi Jinping are already tense given the additional $200b in tariffs the former imposed on the latter. If these revelations inspire additional retaliation from Trump, there could yet be more room for market mood to deteriorate.

The markets are also getting acclimated to the reality that tightening global credit conditions are here to stay as the Fed continues pursuing interest rate hikes. As the yield advantage between it and the RBNZ continues to widen, relatively speaking the New Zealand Dollar still has much to lose. Given these risks, the fundamental outlook will have to be bearish.

Just getting started trading currencies? See our beginners’ guide for FX traders to learn how you can apply this in your strategy!

Analyst Pick

AUD/NZD Long at 1.09168

FX Trading Resources

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

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

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

DISCLOSURES