By
Nick Cawley
of
DailyFX
Saturday, August 19, 2017 4:41 PM EDT
Talking Points:
- The RBNZ will be closely watching the recent Kiwi uptick.
- The latest quarterly producer price data was mixed.
- The downside still looks the path of least resistance for NZD/USD.
Fundamental Forecast for NZD: Neutral
We remain neutral on the New Zealand - with a bias to sell any strong rallies – despite the Kiwi gaining on the back of improving market sentiment. The high yielding currency normally benefits when markets turn ‘risk-on’ and the recent easing of tensions between the US and North Korea saw NZD buyers return. The RBNZ however will be watching the currency closely and has in the past said that it would act if needed to contain any unwanted currency appreciation.
The latest PPI figures showed a mixed message with input costs rising by 1.4%, compared to last quarter’s 0.8%, while output costs rose by 1.3% against a prior quarter’s 1.4%.
A look at the chart below shows the NZD/USD forming a head and shoulders pattern which normally points to the market turning lower. Resistance is likely to be found around the 0.7360 level ahead of the 23.6% Fibonacci retracement level at 0.7383.
Retail trader data shows a ratio of traders short to long at 2.04 to 1. In fact, traders have remained net-short since May 24 when NZDUSD traded near 0.68435; price has moved 7.0% higher since then. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests NZD/USD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed NZD/USD trading bias and leaves us on the side-lines for now.
Disclaimer: DailyFX, the free news and research website of leading forex and CFD broker FXCM, delivers up-to-date analysis of the ...
more
Disclaimer: DailyFX, the free news and research website of leading forex and CFD broker FXCM, delivers up-to-date analysis of the fundamental and technical influences driving the currency and commodity markets. With nine internationally-based analysts publishing over 30 articles and producing 5 video news updates daily, DailyFX offers in-depth coverage of price action, predictions of likely market moves, and exhaustive interpretations of salient economic and political developments. DailyFX is also home to one of the most powerful economic calendars available on the web, complete with advanced sorting capabilities, detailed descriptions of upcoming events on the economic docket, and projections of how economic report data will impact the markets. Combined with the free charts and live rate updates featured on DailyFX, the DailyFX economic calendar is an invaluable resource for traders who heavily rely on the news for their trading strategies. Additionally, DailyFX serves as a portal to one the most vibrant online discussion forums in the forex trading community. Avoiding market noise and the irrelevant personal commentary that plague many forex blogs and forums, the DailyFX Forum has established a reputation as being a place where real traders go to talk about serious trading.
Any opinions, news, research, analyses, prices, or other information contained on dailyfx.com are provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
less
How did you like this article? Let us know so we can better customize your reading experience.