Short term
Trade view / 05 October 2016 at 1:10 GMT

Further downside potential ahead for NZDUSD

Managing Director / Technical Research Limited
New Zealand
Instrument: NZDUSD
Price target:
Market price:

The Reserve Bank of New Zealand desperately wants the Kiwi dollar to decline, thereby importing enough inflation to give it a chance of reaching the 2% inflation target. Frustratingly for it, NZDUSD has held up due to (1) a 2%+ money market rates (2) improving commodity prices and (3) risk appetite in global markets. 

There are signs all three could turn in the RBNZ’s favour. A rate cut at its next meeting on November 10 is highly likely; dairy prices fell in yesterday’s auction and a sudden switch to risk-off trading could be triggered by any number of events (including a Donald Trump revival).
There is no economic data of note due out in New Zealand this week so Friday’s US jobs report will be the flash point for any NZDUSD move. Expectations centre around 170,000 jobs added and perhaps a small decline in the unemployment rate. But, as usual, its a crapshoot.
For more background on the Australasian situation, refer to today’s article: Inflation at the heart of Aussie and Kiwi directions.

Management and risk description

From an Elliott Wave perspective, the Kiwi is still interpreted to have completed a complex “Double Three” corrective structure on last month’s 0.7485 high, with downside potential toward the 0.6985/0.6950 area (refer daily chart below). Resistance now lies at 0.7200/0.7230 to yield the next selloff toward 0.7090/0.7060.


Entry: NZDUSD is seen as a sell today around the 0.7220 level.

Stop: 0.7243, initially.

Target: 0.7067.

Time horizon: allow a few days.  

NZDUSD daily chart (click to expand)
NZDUSD  Daily chart
 Source: ThomsonReuters  

NZDUSD weekly chart (click to expand)
 Source: ThomsonReuters. Create your own charts with SaxoTrader; click here to learn more 

– Edited by Gayle Bryant

For more on forex click here

Non-independent investment research disclaimer applies. Read more


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail