The NZD has leapt up the charts after the recent news out of the Reserve Bank of New Zealand (RBNZ) to cut interest rates by 25 basis points. This record low of 2.00% had been expected by the markets and came as no surprise as August had always been touted as the time for the RBNZ to strike in the short term. And with the recent changes in mortgage lending it was always leading up to this scenario, as the RBNZ was able to hold back the tide of further property rises while cutting back interest rates. With inflation looking unlikely to be a major catalyst in the near future it certainly has opened up the possibility of further rate cuts, the question is how long can we go before the RBNZ calls it quits at the end of the day.

On the charts the NZDUSD response seems rather strange and quite bullish in the face of a rate cut, but in this case the market expectation was for exactly that and the confirmed result has only led to further buying of the NZD. The push up the charts found resistance at 0.7311 and this level was strong in holding back any further gains. For now the NZDUSD is looking very bullish and unlikely to budge unless we see any strong shocks from the RBNZ when it comes jawboning the market. The next major level of resistance is at 0.7475 and is likely to remain strong for upward movements. The major question surrounding the NZDUSD will be on the fixed interest side of things, with the rate cut putting pressure around there, especially as the US market looks to lift interest rates further.

Oil has been a big mover today in global markets after failing to find any momentum with the bulls and being pushed down by the bears after US crude oil inventories came in stronger than expected at 1.06M (-1.26M exp). This surplus is no surprise at all given the recent weakness in global economic growth and the fact that oil suppliers are keeping the taps on hoping that we will see  a jump in the price of oil per barrel. For me this is a case of a race to the bottom, and while we might have already reached there – this seems to be a case of extra supply being added when the market is trying to recover.

Oil markets have so far been held up by support at 41.37 and this likely to hold in the short term, given how strong this level is looking at present. Any further drops are likely to find further support at 40.00 as this psychological has always been strong when it comes to large market movements. For the coming days though US economic data will likely have the biggest impact, rather than oil technical movements.