The New Zealand dollar bulls have been trying to push higher on the charts as of late as the most recent economic data continues to be positive, and the likelihood of a rate cut is starting to slowly diminish. The most recent economic data was positive with Westpac consumer sentiment lifting slightly to 108.00 (106.00 exp), showing that the so called ‘rock-star’ economy may be starting to get some life back into it with the recent lift in global commodity prices. Certainly the lift in dairy prices has been major catalyst for the economy, and it’s expected to continue into the short to medium term. It seems likely that the Reserve Bank of New Zealand will now be looking to hold back on an interest rate cut in the short term to see if the economy does improve, and if inflation will pick up in the near term which could even warrant an interest rate rise.
On the charts the NZDUSD has so far been relatively upbeat and up until recently the bulls had been in control for the most part. The recent double top at resistance at 0.7475 caused the bears to quickly take control and we’ve seen since a fall through the old bullish trend line. The drop below the 20 day moving average is not a major concern so far, but the rejection of bullish movement at resistance at 0.7319 is of concern for bullish players. The support so far has looked more and more likely to be found in the 50 day moving average, which in the last push was able to bounce back. A strong signal for the bears will be if the 50 day moving average does not provide any support on the charts and drops much lower. This would signal a strong turn and the bears taking charge, something that seems very possible with the USD strengthening as of late.
Silver has so far been an interesting trade as the market continues to play of US data and risk sentiment when it comes to moves in the silver market. For the most part it managed to claim a lot of ground in recent months as markets were very cautious over the Brexit but it has continued to struggle any sort of ground after that. This has been led in turn by the US market looking to lift interest rates which has sucked out a lot of momentum for the USD, as the risk of deflation quickly becomes obsolete.
On the charts silver markets have struggled to maintain momentum and have slipped down to support at 18.791. The market saw some strong pushback higher today, but even that failed to gather any sort of real momentum as it came up short at resistance at 19.298. This strong rejection is certainly looking bearish and I would be surprised to see the bulls come back into the market unless the Fed looked to hold its dovish tone for some time, something that does seem unlikely given how strong their position has been.