- NZD/USD has been piling on the bids again in an extension of the mid-August rally.
- Currently, the pair is trading at 0.6705 having made a high of 0.6727 from a low of 0.6676 – catching a bid on a mostly weaker dollar.
NZD/USD has been riding the coattails of the Aussie dollar which was tempered by Australian politics and lingering US-Chinese trade issues. It’s hard to see the antipodeans performing where the carry now lies in the greenback and anything that comes out of the woodwork which would be a positive to the greenback, (such as prolonged trade war angst in the case of the proxy trade), would quite quickly see off the antipodeans that tend to outperform in terms of volatility on either the long or short sides of the market.
“The NZD has technically broken above the top of its five-month downtrend around 0.6710, although somewhat unconvincingly. Trade headlines are positive right now, but the elephant in the room remains the US-China relationship, and little progress seems to have been made there,” analysts at ANZ explained.
Looking ahead
The August business confidence data is coming up this week and it 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
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 still 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. To the downside, 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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