The quiet week in the FX market continues as the U.S. Dollar holds on to recent gains. One of the few items of excitement on this week’s docket is released later today when the RBNZ hosts a rate decision. But there are scant expectations for any moves as the surrounding context is dizzying in nature. This is going to be the first full monetary policy statement from interim RBNZ Govenror, Grant Spencer. But this also comes at a time when the RBNZ’s focus is being debated, as modifications to the Reserve Bank Act may see employment added as a mandate.
Suffice it to say, we probably won’t see any rate adjustments at this afternoon’s outlay. The one change that we may see is a modification to the bank’s inflation target; but even that brings questions as to how much that may push rate expectations after Graeme Wheeler’s final press conference in August saw the bank share the expectation that rates would stay at current levels until at least September of 2019.
NZD/USD is continuing to recover from the election-fueled losses that saw the pair test the 2017 low just two weeks ago. This shows a double-bottom, and if we can see a down-side break below that point of support, the door can be opened for short-side positions as NZD/USD moves down to fresh yearly lows.
NZD/USD Daily: Double-Bottom with Near-Term Resistance Showing Around Prior Support
The U.S. Dollar
Against most currencies, the U.S. Dollar remains persistently bullish. In DXY, the Dollar is holding on to recent gains after the ECB-inspired breakout. Last week saw buyers show-up to offer higher-low support above prior resistance; but we’ve now had over a week of resistance show around the 95.00 level. Given the quiet calendar for the remainder of the week, this may be pointing to a deeper retracement in this move before the longer-term bullish trend is ready to continue. This could mean a retest of support at the prior zone of resistance that held the highs in DXY for the better part of the past three months. This zone runs from 94.08-94.30 and has yet to be tested as support after the bullish breakout.
