Fundamental Overview
The USD strengthened a bit on Friday following some positive Trump’s comments on China as Treasury yields bounced and erased the Thursday’s losses. Overall, the US dollar performance has been mixed as markets have been driven by quick changes in risk sentiment since Trump’s tariffs threat.
On the domestic side, the US government shutdown continues to delay many key US economic reports. The dollar “repricing trade” needs strong US data to keep going, especially on the labour market side, so any hiccup on that front is weighing on the greenback.
The BLS will release the US CPI report on Friday despite the shutdown, so that’s going to be a key risk event. That will need to be seen in the context of US-China relations and any negative shock by that time though. If things go south, then the CPI will not matter much as growth fears will trump everything else.
On the NZD side, the RBNZ cut by 50 bps at the last meeting bringing the OCR to 2.5%, which is the lower bound of their estimated neutral range (2.5%-3.5%). They kept an easing bias though as they are trying to “feel their way” as RBNZ’s Conway recently said.
On Sunday, we got the New Zealand Q3 inflation report with the data coming out basically in line with expectations. That didn’t change anything in terms of market pricing which continues to see a 99% probability of a cut in November.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that the NZDUSD broke above the downward trendline but couldn’t break above the 0.5760 resistance zone. We are now consolidating just beneath that resistance awaiting new catalysts for the next direction.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the rangebound price action between the 0.5760 resistance and the 0.5710 support. The market participants will likely continue to play the range by buying at support and selling at resistance until we get a breakout on either side.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, there’s not much we can add here as the buyers will likely step in around the support with a defined risk below it to position for a rally back into the resistance, while the sellers will look for a break lower to increase the bearish bets into new lows. The red lines define the average daily range for today.
Upcoming Catalysts
The focus remains on the US-China developments but on Friday we will also get the US CPI report and the US flash PMIs.
