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28 Nov 2014
NZD/USD: Shooting star, bear trendline capped
FXStreet (Bali) - NZD/USD is operating back to its Wed's US close level at 0.7865, following a brief drive north which found dynamic resistance at the third touch of a descending trendline coming from Nov 17 peak at 0.7925, with the end of result being a shooting star on the daily.
Yesterday, we learned that RBNZ sold net NZ$1m in October, implying that no intervention was conducted. Going forward, the main risk for the Kiwi comes early next Monday, as RBNZ Governor Wheeler is due to give a speech about “Reflections on 25 years of Inflation Targeting”. The speech will be available at the RBNZ website from 19.45 GMT during interbank trading, and chances are that since the NZD is stronger on a TWI basis, RBNZ may take the opportunity to heighten its NZD overvaluation rhetoric. Another immediate risk for the NZD is a downgrade in Fonterra's milk cash payouts to farmers for 2015, with the announcement expected between the first and second week of December. Fonterra requires by law to have next forecast out by Dec 15 the latest.
Technically, Jim Langlands, Founder at FXCharts, notes: "A move to the topside would see sellers at 0.7890 (minor) and then again at 0.7900/10, a break of which would head back towards today’s high at 0.7926 and on to last Friday’s spike up to 0.7945. Above there would see another run towards last week’s double top at 0.7975. Below 0.7850 would see bids at minor Fibo levels at 0.7825 and at 0.7800. Below here would see a return to the recent low at 0.7765 but probably not today."
Yesterday, we learned that RBNZ sold net NZ$1m in October, implying that no intervention was conducted. Going forward, the main risk for the Kiwi comes early next Monday, as RBNZ Governor Wheeler is due to give a speech about “Reflections on 25 years of Inflation Targeting”. The speech will be available at the RBNZ website from 19.45 GMT during interbank trading, and chances are that since the NZD is stronger on a TWI basis, RBNZ may take the opportunity to heighten its NZD overvaluation rhetoric. Another immediate risk for the NZD is a downgrade in Fonterra's milk cash payouts to farmers for 2015, with the announcement expected between the first and second week of December. Fonterra requires by law to have next forecast out by Dec 15 the latest.
Technically, Jim Langlands, Founder at FXCharts, notes: "A move to the topside would see sellers at 0.7890 (minor) and then again at 0.7900/10, a break of which would head back towards today’s high at 0.7926 and on to last Friday’s spike up to 0.7945. Above there would see another run towards last week’s double top at 0.7975. Below 0.7850 would see bids at minor Fibo levels at 0.7825 and at 0.7800. Below here would see a return to the recent low at 0.7765 but probably not today."