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  • NZD/USD is currently trading 0.6544 between  0.6542 and 0.6558.
  • NZD/USD traders await  RBNZ’s Financial Stability Report/speech  from Governor Orr later this evening.  
  • Bears will target a break back below the 200 HR MA around 0.6527.

NZD/USD is currently trading 0.6544 having consolidated below a double top on the hourly charts within a range of 0.6542/58 as traders await the RBNZ’s Financial Stability Report and a speech from Governor Orr later this evening.  There have not been any developing stores on the domestic front from New Zealand since the RBNZ reduced the OCR to 1.50% earlier in the month due to low inflation, slowing domestic economy, and global risks.  

However, the RBNZ does seem to be genuinely open-minded about whether to cut the OCR again or not and tonight’s events could be an indicator as to what to expect from the bank going forward – although a further cut in June, so soon, is unlikely and not priced into the market currently. “August is more of a live possibility, but our current forecast is that the RBNZ will keep the OCR on hold at 1.5% until mid-2020, when it will reduce the OCR again,” analysts at Westpac argued.

Elsewhere, we are in a wait and see mode really. With a particular focus on the dollar and the Fed, the US data from the economic performance has not been as promising of late, raising speculation that a Fed easing is still on the cards. The chance of a Fed rate cut by December, implied by Fed fund futures, remained at 130%.

“For all the headline ping-pong the big dollar closed lower last week. US risk assets are no longer immune to the trade skirmish, and some critical data massively missed expectations. Past USD strength will have negative implications for both growth and earnings. These drivers probably keep FX in wait-and-see mode until the G20,” analysts at TD Securities explained.  

U.S. data events

While the second reading of Gross Domestic Product is a highlight this week,  for the last trading day of this month, U.S. PCE will be a focus and could come as a greater consequence. A solid 0.2% m/m increase in core PCE prices, would support the greenback as it would likely translate into a steady 1.6% y/y inflation rate with rounding.  

NZD/USD levels

The bird has broken a daily trendline resistance level on the breakout above 0.6530. However, there is a lack of momentum in the move now and volume has come off steeply on the 4HR time frame with price buckling under a double top with sights on 0.6540, yesterday’s low. Bears will target a break back below the 200 HR MA around 0.6527 to negate further upside potential followed by a subsequent close back into the broader descending channel.