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
More View more
Real Time News
  • 🇫🇷 Consumer Confidence (JUL) Actual: 101 Expected: 102 Previous: 103 https://www.dailyfx.com/economic-calendar#2021-07-28
  • Heads Up:🇫🇷 Consumer Confidence (JUL) due at 06:45 GMT (15min) Expected: 102 Previous: 102 https://www.dailyfx.com/economic-calendar#2021-07-28
  • EUR/GBP IG Client Sentiment: Our data shows traders are now at their most net-long EUR/GBP since Jul 13 when EUR/GBP traded near 0.85. A contrarian view of crowd sentiment points to EUR/GBP weakness. https://www.dailyfx.com/sentiment https://t.co/0CqgbSjVAS
  • Technical analysis of charts aims to identify patterns and market trends by utilizing differing forms of technical chart types and other chart functions. Learn about the top three technical analysis tools here: https://t.co/KDjIjLdTSk https://t.co/wHotmlkaor
  • 🇬🇧 Nationwide Housing Prices YoY (JUL) Actual: 10.5% Expected: 12.1% Previous: 13.4% https://www.dailyfx.com/economic-calendar#2021-07-28
  • 🇩🇪 GfK Consumer Confidence (AUG) Actual: -0.3 Expected: 1 Previous: -0.3 https://www.dailyfx.com/economic-calendar#2021-07-28
  • Heads Up:🇬🇧 Nationwide Housing Prices YoY (JUL) due at 06:00 GMT (15min) Expected: 12.1% Previous: 13.4% https://www.dailyfx.com/economic-calendar#2021-07-28
  • Heads Up:🇩🇪 GfK Consumer Confidence (AUG) due at 06:00 GMT (15min) Expected: 1 Previous: -0.3 https://www.dailyfx.com/economic-calendar#2021-07-28
  • Forex sentiment analysis can be a useful tool to help traders understand and act on price behavior. Learn how to get the most out of understanding trader sentiment here: https://t.co/rJznrXkcYz https://t.co/Vi2PMPsqg2
  • (Sentiment Weekly) S&P 500, Dow Jones Forecast: Retail Investors Intensify Bearish Exposure, Now What? *And recording of today's webinar in the article link below! #SP500 #DowJones https://www.dailyfx.com/forex/technical/article/special_report/2021/07/28/SP-500-Dow-Jones-Forecast-Retail-Investors-Intensify-Bearish-Exposure-Now-What.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/p5UmFwBTsg
New Zealand Dollar Gains on RBNZ, But NZD/USD May Follow S&P 500 Lower

New Zealand Dollar Gains on RBNZ, But NZD/USD May Follow S&P 500 Lower

Daniel Dubrovsky, Strategist

New Zealand Dollar, NZD/USD, RBNZ – Talking Points

  • New Zealand Dollar appreciates on the RBNZ rate decision
  • Sentiment-linked NZD is at risk to rising volatility in equities
  • NZD/USD may fall based on bearish technical warning signs

The New Zealand Dollar gained on the RBNZ rate decision, as anticipated in my fundamental forecast. The benchmark lending rate was maintained at 0.25%, as widely anticipated by economists. What seemed to drive the NZD higher instead was most likely an absence of further quantitative easing measures or a hint of urgency in the near term. That likely disappointed expectations, resulting in a less dovish outcome.

The RBNZ did however keep the door open to provide additional stimulus, with tools such as a negative interest rate. In fact, the central bank reported that the banking system is on track to be ready in an environment of negative rates. This makes sense, the RBNZ sees the balance of risks as tilted to the downside. There may be a rise in unemployment and an increase in firm closures.

Additional Commentary from the Reserve Bank of New Zealand

  • Progress is being made on additional monetary tools
  • Monetary policy needs to support the economy for a long time
  • Alternative tools can be deployed independently
  • The central bank prefers to launch the bank funding program before end of 2020

Heading into the RBNZ, overnight index swaps were pricing in about a 75% probability of a 25-basis point rate cut in February. These odds may have been somewhat diminished. Today’s interest rate announcement also follows in the footsteps of the Federal Reserve from last week. There, Chair Jerome Powell seemed to express a lack of urgency to expand its balance sheet, leaving equities vulnerable to disappointment.

Going forward, the sentiment-linked Kiwi Dollar remains under the mercy of general risk appetite. Lately, the faltering on Wall Street has left the currency vulnerable. Investors may be growing increasingly impatient by a lack of urgency from the Federal Reserve to materially boost asset purchases. This is as a second fiscal package remains on the sidelines given ongoing stalemates between members of Congress.

New Zealand Dollar Technical Analysis

From a technical standpoint, the New Zealand Dollar could be at risk to extending losses. NZD/USD recently closed under a rising trend line from March, confirming the breakout. This followed the emergence of a bearish Shooting Star candlestick formation and negative RSI divergence. The latter showed fading upside momentum. Key support sits below as the 0.6503 – 0.6537 range followed by 0.6381 – 0.6419.

NZD/USD Daily Chart

New Zealand Dollar Gains on RBNZ, But NZD/USD May Follow S&P 500 Lower

Chart Created in TradingView

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

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

https://www.dailyfx.com/forex/fundamental/forecast/weekly/nzd/2020/09/19/New-Zealand-Dollar-Outlook-NZDUSD-May-Rise-on-RBNZ-Watch-SP-500.html

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

DISCLOSURES