31 Oct 2013
NZD/USD under pressure in early European session
FXstreet.com (Athens) – The NZD/USD is trading downwards on the European session, mostly due to the fact that market participants were taken aback by the fact that the FOMC statement was by far less dovish than expected, missing the crucial tweaks that most of traders hoped for.
The NZD/USD was initially spiked upwards on the Asian trading session, as the RBNZ statement pointed out that the expensive kiwi has strong disinflationary affects, so tightening can be delayed further. All in all, the RBNZ will probably lead to the first rate hike in the April as of 2014, thus the ‘kiwi’ got a solid support and the pair headed upwards. But since the middle Asian trading session and the early start of the European opening session, the cross found itself under heavy pressure, almost hovering near 0.8240 area, 24 pips down from the early Wellington trading session. Market participants should not find out of the blue this pullback, as investors had at a very large extent priced in that RBNZ would be dovish due to the expensive kiwi, while on the other hand failed in their estimations pertaining to FOMC statement. Briefly, traders awaited for a much more dovish FOMC outcome, as Fed officials amidst an environment of a US sluggish economy and the 16-day governmental shutdown - alongside with the fiscal insanity – preferred to emphasize a glass half full approach.
Technical Perspective on the NZD/USD
Traders should bear in mind that as long the cross is well above the 200-daily MA (0.8174) as well as the 50-daily EMA (0.8232), the uptrend shift will be probably sustained. Upwards, traders should carefully look the resistances as of 0.8346 (October 25 high), as well as 0.8446 (October 24 high). Imre Speizer on behalf of Westpac suggests that “The RBNZ OCR Review today confirmed the elevated exchange rate, if it persists, could delay the onset of rate hikes. This dovish shift should allow accrual trades to prosper for a few more weeks at least. Today’s announcement has cast the RBNZ stance in a less hawkish light, and should allow front-end accrual trades to prosper for a few more weeks at least.”
The NZD/USD was initially spiked upwards on the Asian trading session, as the RBNZ statement pointed out that the expensive kiwi has strong disinflationary affects, so tightening can be delayed further. All in all, the RBNZ will probably lead to the first rate hike in the April as of 2014, thus the ‘kiwi’ got a solid support and the pair headed upwards. But since the middle Asian trading session and the early start of the European opening session, the cross found itself under heavy pressure, almost hovering near 0.8240 area, 24 pips down from the early Wellington trading session. Market participants should not find out of the blue this pullback, as investors had at a very large extent priced in that RBNZ would be dovish due to the expensive kiwi, while on the other hand failed in their estimations pertaining to FOMC statement. Briefly, traders awaited for a much more dovish FOMC outcome, as Fed officials amidst an environment of a US sluggish economy and the 16-day governmental shutdown - alongside with the fiscal insanity – preferred to emphasize a glass half full approach.
Technical Perspective on the NZD/USD
Traders should bear in mind that as long the cross is well above the 200-daily MA (0.8174) as well as the 50-daily EMA (0.8232), the uptrend shift will be probably sustained. Upwards, traders should carefully look the resistances as of 0.8346 (October 25 high), as well as 0.8446 (October 24 high). Imre Speizer on behalf of Westpac suggests that “The RBNZ OCR Review today confirmed the elevated exchange rate, if it persists, could delay the onset of rate hikes. This dovish shift should allow accrual trades to prosper for a few more weeks at least. Today’s announcement has cast the RBNZ stance in a less hawkish light, and should allow front-end accrual trades to prosper for a few more weeks at least.”