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.

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
EUR/USD
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
Oil - US Crude
Mixed
Wall Street
Mixed
Gold
Mixed
GBP/USD
Bearish
USD/JPY
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
More View more
Real Time News
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/Yl9vM7kO6a https://t.co/7g9pB8D9xK
  • The Federal Reserve System (the Fed) was founded in 1913 by the United States Congress. The Fed’s actions and policies have a major impact on currency value, affecting many trades involving the US Dollar. Learn more about the Fed here: https://t.co/ADSC4sIHrP https://t.co/OCLzmXaDCu
  • Technical analysis of charts aims to identify patterns and market trends by utilising 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/UZela9nSIm
  • The ISM manufacturing index plays an important role in forex trading, with ISM data influencing currency prices globally. Learn about the importance of the ISM manufacturing index here: https://t.co/Xr3xtoFpZy https://t.co/7oqC3ykBbU
  • Traders utilize varying time frames to speculate in the forex market. The two most common are long- and short-term-time frames which transmits through to trend and trigger charts. Learn more about time-frame analysis here: https://t.co/9S5tXIs3SX https://t.co/IgUIG55MbH
  • Supply constraints, rebounding global demand and rising inflation expectations may drive crude oil prices higher in the near term. Get your market update from @DanielGMoss here: https://t.co/ezPoAwcJt7 https://t.co/NMfk1cYSvE
  • Take a closer look visually at the most influential global importers and exporters here: https://t.co/G58J1dg6y3 https://t.co/OiRiBVeuzL
  • Crude Oil Prices Aiming Higher on OPEC Surprise, Inflation Expectations - https://www.dailyfx.com/forex/fundamental/forecast/weekly/title/2021/03/06/Crude-Oil-Prices-Aiming-Higher-on-OPEC-Surprise-Inflation-Expectations.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Moss&utm_campaign=twr $CL #Crudeoil #OOTT #OPEC https://t.co/AKvXWX9DLQ
  • Given the size of the rally in the eleven months preceding the beginning of the current decline a broader sell-off looks warranted. Get your market update from @PaulRobinsonFX here: https://t.co/UxZiSulpwB https://t.co/raXvlzkGbV
  • Greed is a natural human emotion that affects individuals to varying degrees. Unfortunately, when viewed in the context of trading, greed has proven to be a hindrance more often than it has assisted traders. Learn how to control greed in trading here: https://t.co/kODPAfJE79 https://t.co/lp0tmKS9WR
New Zealand Dollar May Rise as RBNZ Holds Fire on Negative Rates

New Zealand Dollar May Rise as RBNZ Holds Fire on Negative Rates

Daniel Moss, Analyst

New Zealand Dollar, NZD/JPY, NZD/USD, RBNZ, Funding-for-Lending Program – Talking Points:

  • Robust economic data and a less dovish stance from the RBNZ may underpin the New Zealand Dollar.
  • NZD/USD poised to extend climb after breaching key chart resistance.
  • NZD/JPY rates eyeing a push to yearly highs as prices carve out a Bull Flag continuation pattern.
Advertisement

The New Zealand Dollar seems poised to continue outperforming its haven-associated counterparts, on the back of better-than-expected economic data and a less dovish stance from the Reserve Bank of New Zealand.

The RBNZ had been one of the more dovish central banks since the coronavirus crash in March, hinting at the imposition of a negative interest rate policy (NIRP) and potentially intervening in the FX market to stymie NZD’s recent appreciation.

However, the implementation of these measures is beginning to look less probable after Assistant Governor Christian Hawkesby stated that “if the banks don’t like having a negative OCR, then passing on as much of the Funding for Lending Program as possible through into lower lending rates is going to reduce the likelihood that a negative OCR is needed”.

New Zealand Dollar May Rise as RBNZ Holds Fire on Negative Rates

New Zealand 2-year Government Bond yields daily chart created using Tradingview

The Monetary Policy Committee “agreed to provide additional monetary stimulus to the economy” at its November meeting through the introduction of the FLP in early December, which is expected to “reduce banks’ funding costs and lower interest rates”.

Indeed, regional debt markets have rapidly discounted the potential for additional rate cuts following the decision, with the yield on 2-year New Zealand Government Bonds surging back above the sentiment-defining 200-day moving average for the first time since mid-July.

Moreover, with the unemployment rate rising less than consensus estimates and seasonally adjusted retail sales surging a record 28% in the third quarter, policymakers may hesitate to loosen monetary policy conditions further in the near term.

Therefore, the cyclically-sensitive New Zealand Dollar looks set to climb higher against the lower-beta Japanese Yen and US Dollar, if upcoming economic data continues to show the local economy robustly recovering from the March nadir.

New Zealand Retail Sales QoQ

New Zealand Dollar May Rise as RBNZ Holds Fire on Negative Rates

NZD/USD Daily Chart – Break of Resistance Hints at Gains

The technical outlook for NZD/USD rates remains tilted to the upside, as prices begin to probe the 38.2% Fibonacci (0.6954) after breaching Ascending Channel resistance.

With the RSI hovering in overbought territory and the MACD indicator surging to its highest levels since late June, the path of least resistance seems to favour the upside.

A daily close above the December 2018 high (0.6969) is probably required to neutralize near-term selling pressure and carve a path for buyers to challenge the June 2018 high (0.7060).

Alternatively, a pullback towards Ascending Channel resistance-turned-support may be on the cards if the psychologically imposing 0.7000 mark holds firm.

A daily close below the November 17 low (0.6875) likely precipitating a retest of support at the September high (0.6798).

New Zealand Dollar May Rise as RBNZ Holds Fire on Negative Rates

NZD/USD daily chart created using Tradingview

NZD/JPY Daily Chart – Bull Flag in Play?

NZD/JPY rates appear to be gearing up to retest the yearly high, as prices carve out a Bull Flag continuation pattern above key support at the June high (72.18).

The development of the RSI hints at building bullish momentum, as the oscillators holds above 60 and eyes a push into overbought territory for the second time this month.

Breaking through resistance at the January breakaway gap (72.18) would likely bring the November 12 high (72.79) into focus.

Ultimately, a daily close above 72.80 is needed to validate the bullish continuation pattern and could result in price surging as much as 4% from current levels to fulfil the implied measured move (75.54).

Conversely, pushing back below the June high (71.67) may encourage would-be sellers and result in a pullback towards the trend-defining 50-day moving average (70.57).

New Zealand Dollar May Rise as RBNZ Holds Fire on Negative Rates

NZD/JPY daily chart created using Tradingview

-- Written by Daniel Moss, Analyst for DailyFX

Follow me on Twitter @DanielGMoss

Building Confidence in Trading
Building Confidence in Trading
Recommended by Daniel Moss
Building Confidence in Trading
Get My Guide

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

DISCLOSURES