Short term
Trade view / 11 October 2016 at 1:04 GMT

NZDUSD: Kiwi could fly lower still

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

A couple of weeks ago the probability of a rate cut by the Reserve Bank of New Zealand at its next policy review on November 10 was 80%. Since then the odds have drifted down to 65% and, counter-intuitively, NZDUSD has declined in tandem. A stronger US dollar has been one factor, the other is that the New Zealand economy seems to be in fine shape, calling into question whether a rate cut is needed now, or at all. 

Ahead of the RBNZ meeting, next week the third-quarter inflation report will be released, with economists predicting an annual rate close to zero. If the CPI number does meet expectations, the odds of a rate cut will rise again, mainly because in its last policy review the central bank said a cut “will be needed” to revive inflation via a lower exchange rate and hence higher import prices. 
On the other side of the cross, the minutes of the September 21 FOMC meeting will be released on Wednesday and US Federal Reserve Chair Janet Yellen gives a speech on Friday. There were three dissenters at the Fed meeting and the minutes will tell us how close they were to convincing the other seven committee members to pull the trigger then and there rather than wait until December.

Management and risk description

I am still interpreting the Kiwi to have completed a “Double Three” corrective structure on last month’s 0.7485 high (refer daily chart below). Also, from a classical charting standpoint, the Kiwi displays a completed Head and Shoulders with a downside objective of 0.6960 (see daily chart).
In the short term, resistance at 0.7185/0.7200 probably now caps with the next decline targeting 0.7060, enroute to 0.6985/0.6950.


Entry: Today, the Kiwi is seen as a sell about 0.7155 (directly below 0.7100 cancels, as not prepared to chase the market lower).

Stop: 0.7203 initially.

Target: 0.6978.     

Time horizon: Allow at least several 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

For more on forex click here             

— Edited by Susan McDonald

Non-independent investment research disclaimer applies. Read more
vyacheslav111 vyacheslav111
Hi, Max! Your opinion on AUD/NZD now ?


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
- 沪ICP备13028953号-1

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