New Zealand Dollar: NZD/USD (NZD=X) Traders Pricing in Rate Cuts

New Zealand Dollar: NZD/USD (NZD=X) Traders Pricing in Rate Cuts

New Zealand Dollar: NZD/USD (NZD=X) Traders Pricing in Rate Cuts

Last week, the RBNZ made an announcement that showed policymakers believe the New Zealand economy is no longer immune to unconventional policy. The central bank cut its benchmark rate to 1.5% in May and economists expect another reduction on August 6 amid tepid inflation and slowing economic growth. With the benchmark rate expected to drop to 1% by the end of the year, the RBNZ will likely have to turn to unconventional measures to help stimulate the economy.

“This year the Reserve Bank has begun scoping a project to refresh our unconventional monetary policy strategy and implementation. This is at a very early stage,” the RBNZ said in response to an Official information Act request for work on non-standard policy measures.

One unconventional measure could be to take the OCR below zero. The RBNZ could also conduct large scale purchases of either government or corporate bonds, known as quantitative easing.

Last week, the NZD/USD settled at .6639, down 0.0122 or -1.81%.

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 0.67.

The projected upper bound is: 0.67.

The projected lower bound is: 0.65.

The projected closing price is: 0.66.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 27 white candles and 22 black candles for a net of 5 white candles.

Momentum Indicators

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.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 6.8965. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 4 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 44.75. 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 47 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 -111.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 4 period(s) ago.

MACD

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 0.000 at 0.664. Volume was 99% below average (consolidating) and Bollinger Bands were 4% narrower than normal.

Open     High      Low     Close     Volume___
0.663 0.664 0.663 0.664 258
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 0.67 0.66 0.67
Volatility: 9 9 10
Volume: 29,823 35,606 42,768

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.

Summary

FOREX NZD= is currently 1.3% below its 200-period moving average and is in an upward 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 bullish on NZD= and have had this outlook for the last 27 periods.

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