NZDUSD - the Kiwi’s recovery persists
Much to its chagrin, the Reserve Bank of New Zealand is watching the exchange rate creep back up again, despite delivering a virtual guarantee they will cut the 2.25% cash rate at the next policy review on August 11.
It seems that in a world of rock bottom interest rates, New Zealand’s yield curve is still attracting offshore funds despite being at record low levels. On this week’s data calendar we will get an update on inflation expectations and the regular global dairy trade auction (futures prices suggest a good result) but neither are likely to have much impact on NZDUSD.
In contrast, there is plenty of potentially market-moving data out of the US, headed by Friday’s employment report (180,000 new jobs added looks to be the consensus). Tuesday’s PCE inflation update will also be worth watching.
From an Elliott Wave perspective, I am interpreting the Kiwi’s advance from its 0.6245 low of last September as a developing “Double Three” corrective structure (refer daily chart below).
Entry: Buying NZDUSD today at 0.7185/0.7170
Stop: 0 .7129, initially
Target: 50% at 0.7314 and 50% at 0.7538
Time horizon: At least a few weeks
NZDUSD daily chart (click to expand)