The NZDUSD has missed the chance to rise in early hours as GDP forecasts missed expectations as it came in below at 0.6% q/q (0.8% exp). The sharp turn was a result of weaker than expected growth for the New Zealand economy, but at the same time markets felt it didn’t warrant a sharp enough drop in the grand scheme of things as the economy continues to expand, while other major economies see weaker growth rates. One thing though that is clear is that the Reserve Bank of New Zealand is likely comment on the recent growth and the weaker trade balance coming in above expectations at -2.77B. I would expect the RBNZ to be more in favour of a weaker NZD and less in favour of raising interest rates any time soon, as it continues to be a case of the NZD being above where historically you would see it. All in all though, the NZDUSD continues to be one of the most traded pairs, but it’s one weaker currency playing of the other in a weaker economic climate in the southern hemisphere.
On the chart the NZDUSD has failed to break above resistance at 0.7324 and is looking all the more unlikely to test the next level above at 0.7431. If the bulls are to come back into the market then they would obviously need much more assurance from the economic data that there is potential, other than a weaker USD. If the NZDUSD looks bearish then support levels can be found at the following levels: 0.7255, 0.7176 and 0.7054 on the charts. And it looks all the more likely that the bears will look to swipe in the current market climate. Especially with a weak NZD relative to the rest of the developed nations.
The US economy continues to be a mixed bag, as the new economic advisor was appointed today, but was in favour of the continued tariffs. It seems that the market however is not in agreement and the S&P 500 was certainly against as it continued its bearish run drifting lower on the news. The tariffs plus the future rate rises have been negative for the most part and I expect the equity markets to take a fair bit of punishment as a result.
On the charts the S&P 500 has been somewhat bullish in recent times, but over the last three days of this week has struggled to make any impact and the bears have taken a ride. So far the S&P 500 is looking to test support at 2743 with the potential to extend even lower to 2698 and 2666. However, I have expectations that the 100 day moving average is likely to be a strong level of dynamic support for any movements lower, and unless we see anything drastic don’t expect it to be cracked just yet.