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NZD/USD Searches for Support- Retail FX Remains Long Ahead of RBNZ

NZD/USD Searches for Support- Retail FX Remains Long Ahead of RBNZ

David Song, Strategist

Talking Points:

- NZD/USD Retail FX Crowd Remains Net-Long Ahead of RBNZ Policy Meeting.

- USD/CAD Range Remains in Focus Amid Failed Test of Opening Monthly Range.

- USDOLLAR Outlook Hinges on NFP Report- IMF Favors Fed Rate Hike in 2016.

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NZD/USD

NZD/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • NZD/USD remains at risk a for a further decline as the bearish formation continues to take shape; close below 0.7040-50 (78.6% retracement) may open the door for a move towards 0.6950-60 (38.2% retracement).
  • According to a Bloomberg News survey, 10 of the 16 economists polled forecast the Reserve Bank of New Zealand (RBNZ) to keep the benchmark interest rate on hold at 3.50%; will keep a close eye on the forward-guidance for monetary policy amid speculation for the central bank to revert back to its easing cycle.
  • DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long NZD/USD since May 19, with the ratio climbing back towards extremes as it advances to +2.46.

USD/CAD

USD/CAD Daily Chart
  • USD/CAD looks poised to carry the range-bound price action into the week ahead as the 58.9K rise in Canada Employment boosts the appeal of the loonie; may see the Bank of Canada (BoC) turn increasing upbeat towards the economy amid the ongoing series of better-than-expected data prints.
  • Nevertheless, the policy divergence should highlight a long-term bullish outlook for USD/CADas BoC Governor Stephen Poloz continue to endorse a wait-and-see approach.
  • Still waiting for a break/close above 1.2545 (23.6% retracement) or below 1.2370 (38.2% retracement) to reinforce a near-term directional bias for USD/CAD.

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Read More:

The Weekly Volume Report: Sterling Declines on Weak Volume

EUR/USD Drops Through $1.1100 after May US Jobs Growth Hits +280K

USDOLLAR(Ticker: USDollar):

IndexLastHighLowDaily Change (%)Daily Range (% of ATR)
DJ-FXCM Dollar Index11993.3612024.211919.930.59144.48%
USDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Despite the bullish reaction to the 280K expansion in U.S. Non-Farm Payrolls (NFP), the Dow Jones-FXCM U.S. Dollar appears at risk for range-bound prices as it preserves the monthly opening range following the failed run at 12,049 (78.6% retracement).
  • Uptick in Labor Participation paired with stronger wage growth raises the scope for Fed liftoff in September, but will keep a close eye on the U.S. Advance Retail Sales report amid the ongoing weakness in private-sector consumption.
  • Need a break/close above 12,049 (78.6% retracement) to favor a further advance, with near-term support coming in around 11,826 (61.8% expansion) to 11,843 (38.2 retracement) on the radar.

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--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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