New Zealand Dollar, NZD/USD, Industrial Profits, Retail Sales, Treasury Yields– Talking Points
- New Zealand Dollar struggles as RBNZ bets see 25 bps hike instead of 50 bps
- Australian retail sales, Chinese industrial profits offer potential event risks
- NZD/USD price gyrating near the 50-day Simple Moving Average (SMA)
Tuesday’s Asia-Pacific Forecast
The risk-sensitive New Zealand Dollar struggled against the US Dollar overnight as US equity traders carefully rotated out of growth stocks. Energy stocks rallied in Wall Street’s Monday session. Higher natural gas and oil prices appear to be behind the move. Crude oil rose to its highest level since July, while natural gas prices surged to a fresh multi-year high.
Treasury yields climbed again on Monday, extending a move from last week when the Federal Reserve signaled the central bank is moving closer to tapering balance sheet growth. The upward move in the short-end of the curve persisted, with the 2- and 5-year Treasury yields outpacing the longer-dated 10- and 30-year yields.
In addition to the FOMC-charged US Dollar, the Kiwi Dollar is facing pressure after the Reserve Bank of New Zealand tempered rate hike bets. Assistant Governor Christian Hawkesby’s comments from last week suggested that the RBNZ will move rates on a gradual basis using 25 basis point increments. Traders were pricing in a 50 basis point hike for October’s meeting. This keeps the RBNZ on a hawkish path, although not as relatively aggressive. The RBNZ will release its October rate decision next week.
Today offers several potential event risks through incoming economic data. China will report industrial profits at 01:30 GMT. Australia’s retail sales report for August will cross the wires at the same time. Analysts expect the month-over-month figures to come across at -2.5%, which follows a 2.7% monthly drop from July. A worse-than-expected figure may weigh on market sentiment in today’s session.
NZD/USD Technical Forecast
NZD/USD is gyrating around the 50-day Simple Moving Average. A congestion area that offered support and resistance from August appears to be providing support currently. The 38.2% Fibonacci retracement from the August/September move is the level to clear if prices take off from the 50-day SMA. MACD and RSI are both in rather neutral positions.
NZD/USD 8-Hour Chart
Chart created with TradingView
— Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwateron Twitter