Never miss a story from David Song

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to David Song

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

New Zealand Dollar Talking Points

NZDUSD trades near the 2019-low (0.6482) as the escalating trade dispute between the US and Chinaputs pressure on the Reserve Bank of New Zealand (RBNZ) to implement lower interest rates.

NZDUSD Rate Eyes 2019 Low Ahead of RBNZ Amid Threat of Currency War

The People’s Bank of China’s (PBOC) decision to weaken the Yuan reference rate comes in response to the new round of US tariffs, and the threat of a currency war may push the RBNZ to insulate the New Zealand economy as “members agreed that more support from monetary policy was likely to be necessary.

Image of DailyFX economic calendar

The RBNZ is expected to cut the official cash rate (OCR) to a fresh record low of 1.25% at the upcoming meeting on August 7, and Governor Adrian Orr and Co. may continue to push monetary policy into unchartered territory amid the weakening outlook for the Asia/Pacific region.

Image of RBNZ official cash rate

In turn, the New Zealand Dollar stands at risk of facing a more bearish fate especially if the RBNZ endorses a dovish forward guidance for monetary policy, but it remains to be seen if the central bank will implement lower interest rates throughout the remainder of the year as “domestic GDP growth had held up more than projected in the March 2019 quarter.

With that said, a less dovish policy statement may curb the recent decline in NZDUSD, and the RBNZ may take a more reactionary approach in managing monetary policy as “several central banks are now expected to ease monetary policy to support demand.

Keep in mind, the broader outlook for NZDUSD remains mixed as the decline from the March-high (0.6939) fails to spur a run at the 2019-low (0.6482), but recent developments in the Relative Strength Index (RSI) warn of a further decline in the exchange rate as the oscillator snaps the bullish formation from earlier this year.

Sign up and join DailyFX Currency Strategist David Song LIVE for an opportunity to discuss potential trade setups.

NZD/USD Rate Daily Chart

Image of nzdusd daily chart
  • The 2019-low (0.6482) sits on the radar for NZDUSD as the exchange rate extends the series of lower highs and lows from the previous week, while the Relative Strength Index (RSI) snaps the bullish formation from earlier this year and approaches oversold territory.
  • Need a break/close below the Fibonacci overlap around 0.6490 (50% expansion) to 0.6520 (100% expansion) to open up the next downside hurdle around 0.6370 (50% retracement) to 0.6430 (78.6% expansion), which largely lines up with the 2018-low (0.6424).
  • However, another failed attempt to break/close below the support zone around 0.6490 (50% expansion) to 0.6520 (100% expansion) may generate a near-term rebound in NZDUSD, with the first region of interest coming in around 0.6600 (23.6% retracement) to 0.6630 (78.6% expansion) followed by the 0.6710 (61.8% expansion) to 0.6740 (23.6% expansion) area.

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019.

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong.