New Zealand Dollar, NZD / USD, AUD / NZD, Covid, Risk Trends, RBNZ – Call Points
- New Zealand Dollar as the global mood recovers, most peers win
- RBNZ interest rate The growth concerns associated with Covid are dampening the stakes higher
- NZD / USD the bounce puts the psychological level back in the spotlight as a potential resistance
Thursday’s Asia-Pacific outlook
Traders in the Asia-Pacific region are waiting to see how they develop Wall Streeta spirited session where stocks closed higher, reaching a rebound to the second day after markets sank to the bottom on Monday. Benchmark S&P 500 closed higher on Wednesday at 0.82%, moving the index within 1% from last week’s all-time high. The foreign exchange market reflects a new round of buying, with the risk-sensitive New Zealand dollar rising against most major currency counterparties.
The main background of the kiwi dollar improved after The Reserve Bank of New Zealand (RBNZ) moved to end its large-scale asset purchase (LSAP) program on 23 July. The RBNZ shift sent interest rate stakes to the skies as traders valued the Hawkish movement. Growing concerns about the Covid-19 Delta variant, especially in the Asia-Pacific region, I saw these contributions earlier this week. However, the recovery in global sentiment has boosted trade, as evidenced by rising overnight index-linked swap (OIS) interest rates. It is a derivative that reflects expectations about future changes in the official cash rate (OCR).
Nevertheless, Australia highlights the growing threat of the Delta strain in the region, as low vaccination rates are forcing policymakers to impose restrictive measures. Most of Tasman’s trips have been suspended. The three closed states of Australia, which make up nearly half of the country’s population. New Zealand, on the other hand, is largely free of community-based infections. This gives the Kiwi economy an advantage in terms of potential growth over Australia. This difference is reflected in exchange rates together AUD / NZD a decrease of more than 1.5% compared to the month. This is the worst monthly result this year. Australia’s retail sales fell sharply from June lowered the currency pair overnight.
Elsewhere, US dollar strength – strong economic data and the contribution of Fed interest rate hikes – has outperformed the New Zealand dollar this month, although NZD /USD seems to be eating up losses after winning overnight. If risk aversion remains subdued, it is likely to promise good for the Kiwi dollar. The rest of this week’s economic situation is negligible for any high-impact events that may leave the prevailing risk trends unchecked. Next week, the island country’s trade balance figures will look over the wires. The federation’s decision on interest rates in July could also fuel significant volatility in NZD / USD next week.
Today’s session, however, offers little bait for event-driven trading. Japan will release foreign investment data for the week ended July 17, and Thailand will see its June trade figures across the border. According to the DailyFX economic calendar, Indonesia keeps the exchange rate stable at 3.5%. Tonight, interest rate traders will take a look at the European Central Bank’s interest rate decision, which can be seen in a fluctuating reaction in euros / dollars.
NZD / USD technical outlook:
The overnight recovery in NZD / USD has refocused the psychological level of 0.7000. Prices are drifting higher and the 38.2% Fibonacci retracement currently seems to offer little resistance. If the pause exceeds 0.7000 levels, you would see a falling 26-day exponential moving average in focus.
Alternatively, going lower would threaten to add a series of lower low levels. However, the RSI oscillator has not kept pace with prices, forming a bullish divergence, suggesting that the negative momentum has been exhausted.
NZD / USD 8-hour chart
The chart has been created TradingView
New Zealand Dollar TRADE RESOURCES
– Written by DailyFX.com analyst Thomas Westwater
Use the comments section or below to contact Thomas @FxWestwaterTwitter