Market News & Analysis


Top Story

Currency Pair of the Week: NZD/USD

The Reserve Bank of New Zealand (RBNZ) is set to meet on Wednesday to discuss interest rate policy.  Although no change is expected, the focus will be whether or not they increase the size of their QE, and my how much.  At the last meeting in March, there was talk they could double the size of QE to NZD 60 billion at this meeting.  In addition, market participants will be watching the press conference to see if there is talk about the possibility to moving to negative interest rates.  If the RBNZ continues with a dovish tone, the New Zealand Dollar could move lower.

On Tuesday, the US releases Inflation data.  The headline inflation rate is expected to fall from -0.4% to -0.7%.  The Core inflation rate is expected to fall to -0.2% from -0.1%.  There has been speculation among economists and traders lately that the Fed may go to negative interest rates, something they don’t want to do.  On Tuesday there are no less then 5 Fed members speaking throughout the day. In addition, Fed Chairman Powell is set to speak on Wednesday to the Peterson Institute for International Economics regarding the current US economy.  It will be important to watch for any comments regarding negative rates. 

The daily timeframe chart for NZD/USD is showing that price is currently in an ascending wedge formation. Traders will look for a break lower to confirm the wedge.  The target for an ascending wedge is a full 100% retracement, which would put price below .5700.  In addition to the ascending wedge, the pair opened the week just below horizontal resistance at .6193 and has been hovering near the 50% retracement level form the highs of December 31st, 2019 to the lows of March 19th, near .6110.  Although there is still lots of time left in the day, NZD/USD is in the process of forming a bearish engulfing candle, which would point lower for the pair.

Source:  Tradingview, City Index

Resistance above at the previously mentioned horizontal resistance level of .6193.  Next level is the 61.8% Fibonacci retracement level and the upper trendline of the ascending wedge near.6260.  Above there, price can run up to the March 9th highs near .6450.  First support is at the bottom trendline of the ascending wedge near .6050.  Below there, NZD/USD can fall all the way down to horizontal support near .5740.  Final support is March 19th low at .5470.

NZD/USD traders will have all eyes on their respective central banks this week.  The more dovish central bank will win the battle for a depreciation of their currency.  However, the technical picture is showing a corrective formation, which indicates that the pair may be ready for a move lower!


Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.