New Zealand Dollar, NZD/USD, AUD/NZD, S&P 500 - Briefing
- New Zealand Dollar hits a snag as sentiment sours after Facebook earnings
- Sentiment-linked NZD at risk to Amazon earnings and US non-farm payrolls
- NZD/USD rejects near-term falling trendline, AUD/NZD uptrend extends
The New Zealand Dollar may be readying to resume its broader downtrend against the US Dollar as well as the Australian Dollar. Over the past 24 hours, the sentiment-linked Kiwi Dollar was amongst the worst-performance G10 currencies. Risk aversion picked up the pace on Wall Street after the closing bell, sending S&P 500 futures lower ahead of Thursday’s Asia-Pacific trading session.
This followed disappointing earnings from Meta Platforms Inc., the parent company of Facebook. Its share price declined over 20% during after-hours trade following weak guidance. Given that Meta Platforms is one of the largest companies by market capitalization, as well as part of the FAANG group, this likely sent Nasdaq 100 futures lower due to broader market implications.
A similar scenario unfolded in January when shares of Netflix fell by a similar amount in after-hours trade, exacerbating market volatility. This is placing a lot of focus on earnings from another FAANG company, Amazon. The latter is due to report after the closing bell on Thursday. Another soft reading from a FAANG company risks restoring market volatility following calm waters over the past few sessions.
Tech companies are acutely vulnerable to a rising interest rate environment, signaled by the Federal Reserve last week. The growth-oriented sector places greater emphasis on future profits. Rising interest rates slowly degrade those. That is why all eyes will be on January’s US non-farm payrolls report on Friday. Persistently strong wage data may boost inflation expectations, and thus Fed rate hike bets.
NZD/USD 4-Hour Chart
On the 4-hour chart, NZD/USD rejected a near-term falling trendline from the middle of January after negative RSI divergence emerged. The latter indicates fading upside momentum. Prices also left behind a Shooting Star candlestick pattern. Further downside closes may hint at resuming the downtrend. Key support seems to be the January low at 0.6527. Beyond the latter is the August 2020 low at 0.6486. To the upside, confirming a break above the trendline exposes the 0.6699 inflection point. Closing above the latter may open the door to uptrend resumption.
AUD/NZD Daily Chart
Exhausted RBNZ hawkish bets and increasing RBA tightening expectations may continue offering upside for AUD/NZD. On the daily chart, the pair has confirmed a breakout above the 1.0628 – 1.0651 inflection zone as well as the 61.8% Fibonacci retracement at 1.0692. That has exposed the June high at 1.0813. Clearing the latter may then open the door to extending gains towards the March high. On the downside, the 20- and 50-day Simple Moving Averages (SMAs) are sloped upward and may maintain the uptrend.
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--- Written by Daniel Dubrovsky, Strategist for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
https://www.tradingview.com/symbols/AUDNZD/?exchange=FX_IDC
