- Kiwi extends weakness ahead of RBNZ, dented by poor China trade data.
- New Zealand is highly dependent on China for its exports revenues and a big miss on imports weighing down on NZD.
- Technical studies also support downside. We note bearish RSI divergence, rollover of Stochs and RSI from overbought levels and bearish MACD crossover.
- NZD/USD has shown a break below 20-DMA at 0.74 levels. Scope now for test of 50-DMA at 0.73.
- Violation at 50-DMA could see drag upto cloud top at 0.7233. Bearish invalidation only above 20-DMA.
- Focus on China’s inflation data due tomorrow along with RBNZ policy decision.
- Markets also awaiting US JOLTS job openings and IBD/TIPP Economic Optimism for fresh impetus on the buck.
Support levels - 0.7333 (July 20 low), 0.7303 (50-DMA), 0.7233 (Cloud top)
Resistance levels - 0.74 (5-DMA), 0.7408 (20-DMA), 0.7458 (July 21 high)
Call update: Our previous call (http://www.econotimes.com/FxWirePro-Kiwi-dented-after-big-miss-in-NZ-employment-change-short-NZD-USD-rallies-833168) has hit TP1&2.
Recommendation: Book partial profits at lows. Lower stops to 0.74. Hold for further downside. TP: 0.7335, 0.73
FxWirePro Currency Strength Index: FxWirePro's Hourly NZD Spot Index was at -77.1959 (Neutral), while Hourly USD Spot Index was at -77.1959 (Neutral) at 0520 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.
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