The New Zealand dairy auctions happened overnight and the market was not impressed by the -1.6% reading on the global dairy trade index, which had a softening effect on the NZDUSD pair. However, the market is certainly poised for movements today with the unemployment rate figures due out in a few hours and many are expecting to see the economy further improve to 4.8% (prev 4.9%). In addition to this, the market will be closely watching private sector wages, as it is a strong indicator of economic growth and something that the Reserve Bank of New Zealand will be paying close attention to. For me an increase here may even boost the prospect of inflationary pressure further down the track, so it could be good for fixed income traders looking for a boost in the long run.
For the NZDUSD on the charts it has been a soft day for a very bullish pair. The retraction today down to support at 0.7457 as in line with the recent fight back from the USD, but it also poses some interesting questions for currency traders with this pair. There is certainly further room for movement on the chart and the push down to the trend line gives it space to breathe. The real question would be how traders would look to fight this off, as at present they’re protecting the support area quite aggressively. In the even the USD does dip lower I would expect the NZD to hold up around the second support level at 0.7400 which is a nice psychological level as well; below this the trend line would be the next big test. For resistance levels 0.7526 is currently the mark to beat with the NZDUSD really struggling to break past. A breakout past this level which could close above would likely see it trend higher to 0.7593.
Oil continues to be up and under and all over the place as of late on the back of global news. After rising higher in early trading on the back of US sanctions on Venezuela the market quickly cooled to the idea of that having any effect. Further blows were dealt to the bulls as reports surfaced that Libya an OPEC member was currently pumping the most amount of oil since 2013 and this seemed likely to be a continuing trend in long run. The market is still anticipating a draw down in the market however, so private oil data tomorrow will be really key regarding movements.
The aggressive candle we have seen today is a very sharp pullback and could have been further compounded by profit taking as the market started to turn aggressively. The drop down today touched key support at 48.46, but also failed to close any lower down to the next level support at 47.25. If the bulls can come back into the market expect to see them try and claw back the ground they’ve lost and aim for resistance at 50.10 and 51.67 further down the line.