New Zealand Dollar: NZD/USD (NZD=X) hovering near the 0.65 mark
It has been a quiet start to an action-packed week, with modest movements in equities, bonds and currency markets. The NZD is hovering near the 0.65 mark, while the AUD has slipped overnight to 0.6850.
Markets are in a holding pattern, with focus firmly directed towards the Fed’s policy update on Thursday morning NZ time. Ahead of that meeting, Citigroup’s US economic surprise index remains deep in negative territory as the run of economic data remains below expectations.
Overnight, the New York Fed’s Empire State manufacturing survey was released and the headline index fell by a record 26.4 points to minus 8.6, well below expectations, but the result looks to have been severely impacted by the timing of the survey – just after Trump threatened to impose tariffs on all goods from Mexico.
The NAHB’s homebuilders’ sentiment index was also below expectations and went against the positive trend of other housing indicators, with rising costs and trade issues noted in the comments.
Commerce Secretary Ross downplayed the prospect of a major trade deal emerging from a possible meeting between President Trump and President Xi Jinping at the G20 summit at the end of this month, with the most that will come out “might be an agreement to actively resume talks”.
Public hearings in Washington are due this week on the proposed increase in tariffs on the remainder of goods imports from China, where hundreds of companies and industry groups are expected to fight against the move and plead for an exemption for particular goods.
Currency movements have been modest to begin the week. NZ’s performance of services index rose in May, which came as a relief following last week’s soft manufacturing PMI, although the trend remains firmly downward.
Still, the lack of another lurch down paved the way for a slight recovery in the NZD after last week’s beating. It reached as high as 0.6515 last night but has since retreated to just below the 0.65 mark. The AUD began to drift lower after the NZ close and touched 0.6850 overnight, where it is now finding some support. So NZD/AUD is up 0.3% to 0.9480.
GBP is also on the soft side of the ledger, down 0.4% to 1.2540, ahead of the next round of voting to determine the new PM. Boris Johnson remains the man to beat, with the real battle being who will be the other candidate to face him in the head-to-head vote that goes out to the Conservative party membership.
EUR is flat around 1.1220. Ahead of the ECB’s big conference in Portugal a couple of members, Coeure and Hernandez de Cos were on the wires, offering a downbeat assessment about the outlook for growth and inflation.
Hernandez de Cos reiterated that the ECB is ready to use other tools, including rate cuts, to boost inflation and growth. Coeure said that the signals from financial markets are “quite alarming” and the ECB was talking about “contingency planning”.
Overall, the bias in prices is: Downwards.
The projected upper bound is: 0.66.
The projected lower bound is: 0.64.
The projected closing price is: 0.65.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 5 black candles for a net of 1 black candles. During the past 50 bars, there have been 21 white candles and 27 black candles for a net of 6 black candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 11.8203. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 8 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 42.78. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 18 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -87. This is not a topping or bottoming area. The last signal was a buy 0 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 2 period(s) ago.
Rex Takasugi – TD Profile
FOREX NZD= closed up 0.003 at 0.652. Volume was 5% below average (neutral) and Bollinger Bands were 0% wider than normal.
Open High Low Close Volume___
0.649 0.654 0.649 0.652 37,690
Short Term: Oversold
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 0.66 0.66 0.67
Volatility: 10 8 10
Volume: 37,506 35,946 45,296
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FOREX NZD= is currently 2.7% below its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of NZD= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on NZD= and have had this outlook for the last 9 periods.