In opinion of FX Strategists at UOB Group, the Kiwi Dollar is seen extending the consolidation at current levels in the near term.
Key Quotes
24-hour view: “While we expected NZD to weaken yesterday and “test 0.6365″, we were of the view “a sustained weakness is unlikely”. However, NZD cracked 0.6365 and dropped to 0.6342 before settling on a weak note (NY close of 0.6347, -0.47%). From here, further decline would not be surprising but oversold conditions could ‘limit’ any weakness to 0.6300 (there is a relatively strong support level at 0.6330). On the upside, 0.6380 is expected to be strong enough to cap any intraday rebound (minor resistance at 0.6365)”.
Next 1-3 weeks: “We detected the waning momentum early last Friday (13 Sep, spot at 0.6405) and warned that the “odds for further NZD strength have diminished”. After the weak daily closing in NY on Friday, we indicated yesterday (16 Sep, spot at 0.6380) that “a short-term top is in place” and expected NZD to “trade sideways between 0.6330 and 0.6430 for now”. Our view was not wrong even though the relatively large and rapid decline of -0.47% (0.6347) yesterday was not exactly expected. For now, we continue to expect NZD to trade sideways, albeit likely at a lower range of 0.6300/0.6400. Looking forward, if NZD were to register a NY close below 0.6300, it would suggest the early September low of 0.6270 would come under pressure. At this stage, the prospect for a move to 0.6270 is not high”.
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