Short term
Trade view / 31 July 2016 at 23:29 GMT

NZDUSD - the Kiwi’s recovery persists

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

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.

Management and risk description

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).

Support now lies at 0.7185/0.7170, 0.7135 max. for rally onto the 0.7300/0.7325 resistance area, with potential to reach the mid/late 0.7500’s in the days ahead, before exhaustion (see daily chart).


Entry: Buying NZDUSD today at 0.7185/0.7170

0 .7129, initially

50% at 0.7314 and 50% at 0.7538

Time horizon:
At least a few weeks

NZDUSD daily chart (click to expand)
NZDUSD daily chart
 Chart: NZDUSD Weekly chart (click to expand)
NZDUSD Weekly Chart
Source: Both charts, ThomsonReuters  

— Edited by Adam Courtenay

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Non-independent investment research disclaimer applies. Read more
brian1983 brian1983
What about AUD USD? rate cut likely tmr
Patto Patto
Market pricing today says 65% chance of a rate cut by RBA tomorrow (and 100% chance by RBNZ on Aug 11)
Treve Treve
thanks for this coverage, far too many bears still about!
vyacheslav111 vyacheslav111
Hi, Maks! Your opinion now ?
spot on Max! congrats!


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