- NZD/USD has rallied to meet the previous day’s highs, extending gains in the early Asian shift from the lows of 0.6669 made in the European session and adding on more territory above the 21-D SMA.
- The weekly 10 SMA is the first key target – located at 0.6734.
The markets are buoyed by not only Powell’s foresight for 2019 and potentially less requirement for rate hikes but some potential positive progression over global trade. As analysts at ANZ explained, risk appetites were buoyed by the US-Mexico trade news, but the NZD reaction was somewhat muted:
“In many ways it is how we see the rest of the year playing out; we are not outright bullish on the USD here given what is already ‘priced’, but over the medium term we see it doing better than the NZD.”
Meanwhile, the Kiwi is not really a currency that is going to bring any specific news related to the NZ economy and indeed it is a void of events at the moment. The bird is merely matching the ebbs and flows over the broader global risk environment – but the market is very short and that is exaggerating the bid. The only thing out there on the horizon appears to August business confidence data. That is always a number that is worth keeping an eye on something that the RBNZ has cited weak investment intentions as a reason for a more subdued outlook for the New Zealand economy.
Looking to the RBNZ
Looking to the RBNZ, Governor Orr, at the Jackson Hole, reiterated that the central bank intends to hold policy rates low for an extended period of time which is likely to keep a lid on short-term New Zealand rates and the Kiwi dollar.
NZD/USD levels
The weekly 10 SMA is the first key target – located at 0.6734 and if broken, it will be the first time the price has traded above it since mid-April earlier this year. On the flipside, however, support is located at 0.6630, while otherwise, the bull’s target in the medium term should be the 200-month moving average resistance at 0.7019.
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