- NZD/USD has been a top performer on Tuesday, demand driven on the US dollar down hard again.
- General improved tone in risk sentiment has given the Kiwi flight.
- All eyes on FOMC minutes, China/US trade talks and Jackson Hole.
- A possibility of a stretch towards 0.6860 if 21-D SMA at 0.6703 can be cleared.
NZD/USD has been a top performer on Tuesday, with little rhyme or reason, for the GDT price index was another negative input for the bird, -3.6%, and indeed, New Zealand dairy prices down more than 10% since May. Instead, the general improved tone in risk sentiment has given the Kiwi flight. NZD/USD has topped out at .6701 on a rally from way down in the 0.6540s.
- Wall Street ends the day modestly higher, S&P 500 eases off record highs
The US dollar was sold off further in NY today following the supply from Friday that gut under the wings of the bird in Asia and European markets as well at the start of this week. NZD/USD is now well on the way for reclaiming the highs at the start of this month at 0.6750/60 before the Turkey currency crisis hit the currency boards. The US benchmarks all made strong gains, with the S&P 500 marking fresh intraday highs, the highest levels since January earlier this year.
“A better tone to risk sentiment, with the addition of a repositioning in markets, contributed to a weaker USD overnight and saw the NZD pop above interim resistance. It could have further to run, although we are of the mind to start to fade this move,” analysts at ANZ explained.
The week ahead and US/China Plot Road Map
From here on, all eyes will be on the FOMC minutes tonight, the Jackson Hole, (tipped to be potentially dovish), and the Chinese and US trade talks getting back underway before the G20 where Xi and Trump will meet after, what the WSJ said was a China Plot Road Map to resolve trade dispute by November’s.
“Scheduled midlevel talks in Washington next week, which both sides announced on Thursday, will pave the way for November. A nine-member delegation from Beijing, led by Vice Commerce Minister Wang Shouwen, will meet with U.S. officials led by the Treasury undersecretary, David Malpass, on Aug. 22-23. The negotiations are aimed at finding a way for both sides to address the trade disputes, the officials said, and could lead to more rounds of talk,” – WSJ
NZD/USD levels
Support is seen at 0.6510 while resistance is located at 0.6750. There is the possibility of a stretch towards 0.6860 if 21-D SMA at 0.6703 can be cleared. This guards territory towards 0.6920 as the June high. The 200-month moving average resistance is at 0.7019. However, on the downside, a break back below the 10-D SMA at 0.6616 opens 0.6510/50. This area guards a run to the 0.6470s and below there, 0.6240 remains as a big level that protecting the double bottom lows at 0.5910 (2004 and 2006 levels).
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