- NZD/USD down over 0.84% on the day after RBNZ held rates with a dovish interest rate forecast.
- NZ bond yields extend losses, narrowing of the NZ-US yield spread is weighing heavily over the Kiwi.
- The central bank published a dovish interest rate forecast, which was a surprise given the markets had positioned for 1-1/2 rate hike over the next one year or so.
- RBNZ assistant governor and chief economist McDermott talked down the domestic currency.
- Reserve Bank of New Zealand's Governor Wheeler said cash rate likely to stay low.
- Regarding the kiwi, he has been jawboning that and said a 7% retracement would be beneficial to export and aggregate growth.
- Next major support seen by 100-DMA at 0.7137, while immediate resistance is seen at 0.7238 (20-DMA).
- Break below 0.7179 (38.2% Fib retrace of 0.6862 to 0.7375 rally) raises scope for test of 100-DMA at 0.7238.
Call update: Our previous call (http://www.econotimes.com/FxWirePro-Bearish-Cypher-on-NZD-USD-good-to-short-close-below-5-DMA-at-07303-528775) has hit TP1 & 2.
Recommendation: Book partial profits, hold for further downside.
