- NZD/USD is starting to stabilise as liquidity dries up into early Asian markets after a day of demand for the greenback which took the Kiwi down to 0.6630 from 0.6701 highs.
- The pair has moved towards 50% of the rally from the 15th August as the dollar was stripped of its safe haven status.
The greenback is picking up demand again but there has been little rhyme nor reason to the moves today. Markets have so far pushed the Trump impeachment sentiment to the back burner given the impeachment process – firstly the Democrats have to win the house and charges probably wouldn’t result in a guilty sentence in the Senate. Ultimately the charges will need to be well-founded in order to be justified. However, the mid-term elections are coming up and that will be something to keep an eye on.
US data weakening
As for US data overnight, US housing indicators continued to soften following the FOMC minutes yesterday that highlighted the board member’s concerns over this marketplace. New home sales were falling to 627k (mkt: 645k; last: 638k) which was the worst level in nine months.
The US August Markit preliminary PMI dropped to 55.0 (last: 55.7) while services slipped to 55.2 (last: 56.0) and manufacturing fell to 54.5 (last: 55.3). “For the manufacturing PMI, every component was slightly lower in August compared to July, except New Export Orders which surprisingly rose to 50.4 (last: 49.7). Overall, these data remain consistent with above-trend growth, but as with other output indicators, appear to have peaked,” analysts at ANZ explained, adding that despite data beginning to show that the US economy’s outperformance is beginning to wane, the USD performed strongly overnight, sending kiwi back down through support. “We are not convinced this broad USD strength will persist, but for now it is in the box seat. Fed’s Powell Jackson Hole speech will be a key focus.”
NZD/USD levels
NZD/USD has flipped over on Thursday, and there is a bearish hammer on weekly sticks – that daily doji gave also gave rise to expectations of a breather in the prior five-day rally. Support is located down at 0.6630 while resistance is at 0.6710. On the downside, a break back below the 10-D SMA at 0.6617 opens 0.6510/50 guarding a run to the 0.6470s. The 21-D SMA at 0.6690 is a hard resistance area that if broken would open up 0.6860. This area guards territory towards 0.6920 as the June high. The 200-month moving average resistance is at 0.7019.
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