New Zealand Dollar: NZD/USD (NZD=X) weaker as PBOC, trade tensions push Chinese currency lower
The New Zealand Dollar entered the new week on its back foot Monday as commodity currencies followed the Chinese Renminbi lower, although analysts at HSBC and Commonwealth Bank of Australia(CBA) have warned there are more losses in store for the Kiwi unit in the months ahead.
The People’s Bank of China (PBOC) set its USD/CNY ‘fixing’ rate at 6.9220 Monday when the market had been looking for the bank to set the exchange rate below 6.90 in an effort to shore up investor confidence in the its ability to keep the currency stable, prompting a sell-off in Renminbi exchange rates and other correlated currencies.
New Zealand’s economy enjoys a large agricultural trade with China, which has seen the Kiwi currency develop a correlation with the Chinese Renminbi, commodity prices and investor risk appetite. And Monday’s decision by the PBOC was seen as an indication that further falls in the Renmimbi are likely.
“The PBOC’s willingness to let the renminbi slide suggests that they also do not have much hope, or intent, that both parties can reconcile their differences any time soon. That promises for a clear risk-off mood in markets, with emerging markets, as well as Australia and New Zealand being the most likely victims. Safe havens like CHF and JPY are already seeing inflows,” says Michael Every, a strategist at Rabobank.
Overall, the bias in prices is: Downwards.
The projected upper bound is: 0.67.
The projected lower bound is: 0.65.
The projected closing price is: 0.66.
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.
An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend (which appears to be the case with FOREX NZD=). It then signifies that the momentum may be shifting from the bears to the bulls.
If the engulfing bullish pattern occurs during an uptrend, it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.
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 36.6265. This is not an overbought or oversold reading. The last signal was a buy 1 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 40.08. 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 53 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 -81. 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 8 period(s) ago.
Rex Takasugi – TD Profile
FOREX NZD= closed up 0.004 at 0.656. Volume was 92% below average (consolidating) and Bollinger Bands were 46% wider than normal.
Open High Low Close Volume___
0.652 0.659 0.651 0.656 2,887
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 0.66 0.66 0.67
Volatility: 7 9 10
Volume: 31,141 36,002 42,234
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 2.4% 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 5 periods.