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.

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
EUR/USD
Mixed
Oil - US Crude
Bullish
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
Wall Street
Mixed
Gold
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
GBP/USD
Bullish
USD/JPY
Bearish
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
More View more
Real Time News
  • Commodities Update: As of 18:00, these are your best and worst performers based on the London trading schedule: Silver: 0.99% Gold: 0.14% Oil - US Crude: 0.02% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/WLLkyZNDig
  • #DAX: A breakout above 12913 could soon have the gap-down in focus from February that kicked off the massive Q1 sell-off. Get your DAX market update from @PaulRobinsonFX here: https://t.co/Cw29vVEcxI https://t.co/Z3fN7K5kpX
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.02%, while traders in US 500 are at opposite extremes with 74.47%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/n5Xuy8XTuC
  • #Fed Beige Book: - Employment increased on net in nearly all districts - Payrolls remain well below pre-pandemic level in almost all districts $DXY
  • #Fed Beige Book: - Economic activity increased in nearly all districts, but down from pre-pandemic levels - Retail sales led by rebound in auto sales - Most districts report uptick in manufacturing activity - Construction remains subdued $DXY
  • RT @MarketsTicker: Fed's Beige Book says activity increased in almost all districts but remains well below pre-pandemic levels
  • Indices Update: As of 18:00, these are your best and worst performers based on the London trading schedule: US 500: 0.69% Wall Street: 0.64% Germany 30: -0.22% FTSE 100: -0.22% France 40: -0.25% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/uVAPLeD1hH
  • New York #Fed Executive VP Logan says drop in balance sheet a signal of financial market health - BBG
  • The plunge in gold volatility has not seen an ensuing drop in gold prices – more evidence that our longstanding axiom on the gold volatility-gold price relationship holds true. Get your $XAUUSD market update from @CVecchioFX here: https://t.co/GeXl10ibPv https://t.co/xH8yBn8qAG
  • Heads Up:🇺🇸 Fed Beige Book due at 18:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2020-07-15
NZD/USD Rate Vulnerable to Dovish RBNZ Financial Stability Review

NZD/USD Rate Vulnerable to Dovish RBNZ Financial Stability Review

2020-05-25 01:00:00
David Song, Strategist
Share:

New Zealand Dollar Talking Points

NZD/USD attempts to retrace the decline from the previous week as New Zealand Finance Minister Grant Robertson announces that the government will consider a national unemployment insurance program, but fresh remarks coming out of the Reserve Bank of New Zealand (RBNZ) may drag on the exchange rate as the central bank retains a dovish forward guidance for monetary policy.

NZD/USD Rate Vulnerable to Dovish RBNZ Financial Stability Review

NZD/USD appears to have marked another failed attempt to test the April high (0.6176) as it pulls back from a fresh monthly high (0.6158), and the exchange rate may continue to carve a series of lower highs and lows even though Mr. Robertson looks to “cushion the blow of job loss through both income protection and retraining.”

Nevertheless, the response by fiscal authorities may push the RBNZ to the sidelines as the central bank expands its Large Scale Asset Purchase (LSAP) programin May to NZ$60 billion from NZ$33 billion, and Governor Adrian Orr and Co. may carry out a wait-and-see approach over the coming months as “the Committee agreed that it will stand ready to deploy further tools as needed, should the need for stimulus continue to increase.”

In turn, the RBNZ may attempt to buy time at the next meeting on June 24, but the update to the Financial Stability Review may fuel speculation for a negative interest rate policy as Chief Economist Yuong Ha reveals that “we’ve given the banking system until the end of the year to get ready so that the option is there for the Monetary Policy Committee (MPC) in a year’s time.”

With that said, the RBNZ may continue to utilize its balance sheet in 2020 as Governor Orr insists that “we don’t want to go negative at this point,” but speculation for a NIRP in New Zealand may drag on NZD/USD especially as Federal Reserve Chairman Jerome Powell tames bets for negative US interest rates.

However, NZD/USD appears to be stuck in the range bound price action carried over from the previous month amid the string of failed attempt to test the April high (0.6176), which lines up with the former support zone around 0.6170 (50% expansion) to 0.6230 (38.2% expansion), and the exchange rate may drift towards the May low (0.5921) as it carves a series of lower highs and lows.

Forex for Beginners
Forex for Beginners
Recommended by David Song
Forex for Beginners
Get My Guide

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 NZD/USD rate daily chart

Source: Trading View

  • Keep in mind, NZD/USD has failed to retain the range from the second half of 2019 as the decline from earlier this year produced a break of the October low (0.6204), with a ‘death cross’ taking shape in March as the 50-Day SMA (0.5994) crossed below the 200-Day SMA (0.6316).
  • The negative slope in both the 50-Day SMA and the 200-Day SMA offer a bearish outlook for NZD/USD, and the advance from the yearly low (0.5469) appears to appears to be capped by the former support zone around 0.6170 (50% expansion) to 0.6230 (38.2% expansion) as both price and the Relative Strength Index (RSI) snap the bullish formations from March.
  • Nevertheless, recent price action warns of range bound conditions as NZD/USD tags a fresh monthly high (0.6158) after struggling to test the April low (0.5843), with the exchange rate marking another failed attempt to test the April high (0.6176).
  • As a result, lack of momentum to hold above the Fibonacci overlap around 0.6070 (100% expansion) to 0.6100 (61.8% expansion) may spur a move towards the 0.6000 (100% expansion) to 0.6010 (161.8% expansion) region, with the next area of interest coming in around 0.5880 (100% expansion).
  • Need a break of the April low (0.5843) to open up the Fibonacci overlap around 0.5740 (78.6% retracement) to 0.5790 (61.8% retracement), with the next area of interest coming in around 0.5640 (261.8% expansion).
Traits of Successful Traders
Traits of Successful Traders
Recommended by David Song
Traits of Successful Traders
Get My Guide

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong

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

DISCLOSURES

News & Analysis at your fingertips.