New Zealand Dollar: NZD/USD (NZD=X) Pressured by Weak CPI Data
After opening the week steady, the New Zealand Dollar took a dive on Wednesday and never recovered, finishing near its low for the week. The catalyst behind the selling pressure was weaker-than-expected consumer inflation data. The bearish news was offset slightly and temporarily by positive economic data from China and the New Zealand government’s decision to shelf an ill-timed capital gains tax.
Statistics New Zealand said the Consumer Price Index (CPI) for the quarter ending in March came in at 0.1 percent, below market expectations of about 0.3 percent and the Reserve Bank’s 0.2 percent forecast. That figure also took the annual inflation rate to 1.5 percent, below the central bank’s 2 percent target.
Given the news CPI data, New Zealand economists are now predicting the Reserve Bank will cut its official cash rate from its present record low at 1.75 percent to 1.5 percent in May.
In other news, Prime Minster Jacinda Ardern said the public has spoken and she won’t introduce a capital gains tax while she leads the Labour Party. The news produced a small technical bounce in the Kiwi, but not enough to change sentiment.
Overall, the bias in prices is: Downwards.
By the way, prices are vulnerable to a correction towards 0.68.
The projected upper bound is: 0.68.
The projected lower bound is: 0.66.
The projected closing price is: 0.67.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 4 black candles for a net of 1 white candles. During the past 50 bars, there have been 26 white candles and 22 black candles for a net of 4 white candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
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 12.7219. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 9 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 34.79. 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 sell 110 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 -162.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 9 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 3 period(s) ago.
Rex Takasugi – TD Profile
FOREX NZD= closed down -0.001 at 0.668. Volume was 60% below average (consolidating) and Bollinger Bands were 5% narrower than normal.
Open High Low Close Volume___
0.668 0.669 0.667 0.668 17,672
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 0.67 0.68 0.67
Volatility: 7 9 10
Volume: 37,391 43,025 49,043
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 0.8% below its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of NZD= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on NZD= and have had this outlook for the last 14 periods.
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