Fundamental
Overview
The USD came under some
renewed pressure following the US CPI report. The data was mostly in line with forecasts
and not strong enough to deter the market from expecting a cut in September.
In fact, the pricing
actually increased to 60 bps of easing by year-end compared to 57 bps before
the CPI release. This just shows that the market is now very confident on a
September cut and fully prices in at least another one before the end of the
year.
A September cut looks
unavoidable now and only a hot NFP report in September might get us to a 50%
probability, although it would certainly diminish expectations for rate cuts
after the September one. For August, we have now just Fed Chair Powell’s speech
at the Jackson Hole Symposium as the next major event. Traders will be eager to
see if he changes his stance as well.
On the NZD side, nothing
has changed fundamentally and we haven’t got any notable data other than the labour market report last week which came mostly
in line with expectations and didn’t change much for the RBNZ pricing. The
market still expects around 42 bps of easing by year-end with 94% probability
of a cut at the upcoming meeting.
NZDUSD
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that NZDUSD extended the gains recently following the US CPI report and pulled
back just before hitting the major trendline around the 0.60 handle. If we get
another rally, we can expect the sellers to step in around the trendline with a
defined risk above it to position for a drop into the key 0.5850 support
zone.
NZDUSD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that we have an upward trendline defining the bullish momentum. If the
price gets there, we can expect the buyers to lean on it to position for a
rally into the major downward trendline. The sellers, on the other hand, will
look for a break lower to pile in for a drop into the key support zone.
NZDUSD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that we have a minor resistance zone around the 0.5965 level. If we were to
get a pullback, the sellers will likely step in there with a defined risk above
the resistance to position for a drop into the upward trendline. The buyers, on
the other hand, will look for a break higher to pile in for a rally into the
major downward trendline next. The red line define the average daily range for today.
Upcoming Catalysts
Today we get the US PPI and the US Jobless
Claims figures. Tomorrow, we conclude the week with the US Retail Sales and the
University of Michigan Consumer Sentiment report.
This article was written by Giuseppe Dellamotta at investinglive.com.