September 15, 2021 14:02:17
The kiwi has been the leading major this month, ahead of a mixed bag of currencies like the yen and pound in the top three. Overnight, we get the release of the June quarter GDP. Due to the national lockdown since then, the data may feel a little dated. But it will still give us a glimpse of how well the economy was doing up until then. And why the RBNZ is firmly in policy normalisation mode as the country moves out of lockdown.
Analysts expect a moderate easing in growth in Q2 to 1.2% from 1.6% previously. This is some way ahead of the RBNZ’s forecast of 0.7% and should further strengthen the case for removing stimulus. Household spending is the main driver with revisions also worth keeping an eye on. Only a major fall could disrupt central bank tightening, with a strong rebound expected when all Covid restrictions are lifted.
NZD/USD bullish consolidation around 0.71
After the kiwi sunk below 0.6850 in late August, buyers have stepped in and pushed the major back into levels last seen in June. Bullish momentum has tailed off most recently with prices tracking sideways around some key technical indicators.
In the zone around 0.71 sits the 50% retrace of the February to August at 0.7133, the 200-day SMA at 0.7117 and the July swing high at 0.7105. The pair has touched the 100-day SMA on a few occasions in recent sessions but has acted as decent support at 0.7074. A strong GDP print may push the kiwi out of this consolidation beyond 0.7150 towards 0.72. The 38.2% Fib level sits below at 0.7055 as the next level of support if we get disappointing data.
AUD/NZD has more downside
This pair has been in one-way traffic since topping out in March at 1.0947. Indeed, since June this year, prices have fallen in 13 out of the last 14 weeks and for the last 10 straight weeks. The latter has not been seen since mid-2010. Almost inevitably, we are oversold on the weekly RSI below 25. Over the last couple of years, there has been quite a sharp retrace when this has happened.
The daily sees no let up with bearish momentum picking up after a brief pause around 1.04. The August cycle low at 1.0345 has been broken with targets now at 1.0275 and the August 2019 spike low at 1.0264. If we do get a pullback which the weekly chart is warning of, buyers will need to get above the previous long-term cycle low at 1.0418 to stop the downtrend.
Although Moneta Markets aims to ensure that the information/material is accurate, it cannot be held responsible for any omissions/miscalculations or mistakes as it does not warrant the accuracy of such material. Any material and/or content provided herein is intended for educational purposes only and does not constitute investment advice on how clients should trade as it does not take into consideration your personal objectives, financial circumstances or needs. Please seek independent advice before making any trading decisions. Reliance on such material is solely at your own risk and Moneta Markets cannot be held responsible for any losses resulting directly or indirectly from such reliance. Any reference to figures/statistics or numbers refers to the group of companies of Moneta Markets. Please refer to the legeal documents should you require more information.
