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NZD/USD Retail Crowd Remains Net-Long Despite Bets for RBNZ Rate Cut

NZD/USD Retail Crowd Remains Net-Long Despite Bets for RBNZ Rate Cut

Talking Points:

- NZD/USD Retail Crowd Remains Net-Long Ahead of Reserve Bank of New Zealand (RBNZ) Meeting.

- AUD/USD Slips to Fresh 2015 Low Ahead of Reserve Bank of Australia (RBA) Minutes.

- USDOLLAR Bullish Sentiment to Gather Pace as Fed’s Bullard Sees September Liftoff.

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NZD/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • NZD/USD may face a larger rebound ahead of the Reserve Bank of New Zealand’s (RBNZ) July 23 interest rate decision as the Relative Strength Index (RSI) threatens the bearish formation from earlier this year; need a break/closing price above the 20-Day SMA (0.6714) to negate the bearish outlook for kiwi-dollar.
  • Despite speculation for a back-to-back RBNZ rate cut, the forward-guidance for monetary policy may have the largest impact on NZD/USD as Prime Minister John Key warns that the depreciation in the exchange rate has ‘fallen further and faster than anticipated;’ will Governor Graeme Wheeler alter the verbal intervention?
  • Nevertheless, the DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long NZD/USD since May 19, with the ratio coming off of recent extremes at it sits at 2.33.


AUD/USD Daily Chart
  • AUD/USD bounces back from a fresh 2015 low (0.7326), but the pair remains at risk of facing a further decline as price & RSI retain the bearish formations, with 0.7500 (61.8% expansion) acting as near-term resistance.
  • Even though the Reserve Bank of Australia (RBA) preserves its current policy, the meeting minutes may heighten the bearish sentiment surrounding the higher-yielding currency should the central bank adopt a more dovish tone for monetary policy & see scope for lower borrowing-costs.
  • As a result, the next downside region of interest comes in around 0.7240 (100% expansion).

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USDOLLAR(Ticker: USDollar):

IndexLastHighLowDaily Change (%)Daily Range (% of ATR)
DJ-FXCM Dollar Index12030.9112051.5412018.99-0.0261.91%
USDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Dow Jones-FXCM U.S. Dollar may extends the advance from earlier this month as it breaks above the June high (12,043); closing price above 12,049 (78.6% retracement) raises the risk for a run at the April high (12,162).
  • With St. Louis Fed President James Bullard seeing a more than 50% chance for September liftoff, the bullish sentiment surrounding the dollar may gather pace ahead of the Federal Open Market Committee’s (FOMC) July 29 interest rate decision as the central bank stays on course to normalize monetary policy later this year.
  • Close above the 12,049 (78.6% retracement) should open up the topside targets, with 12,082 (61.8% expansion) up first, followed by the 2015 high (12,162).

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--- Written by David Song, Currency Analyst

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

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