Bullish NZDUSD: The NZD sits this morning around 0.6435 the last seven NY closes being within a 15pip range of 0.6403-0.6418. Yesterday, the ANZ business outlook survey for November showed both business confidence and own-activity indicators rising to their highest level this year. The data follows a string of supporting positive data, including Q3 retail sales, improved PMIs for manufacturing and services sectors and much higher NZ commodity prices. The positive run of NZ economic data has much reduced the downside risk that has been overhanging our 2% growth forecasts and supports our view that the NZ rate cut cycle is probably over The data didn’t have much long-lasting impact on the market, with the currency back to where it was pre-data, with some resistance met at 0.6430. Earlier, the currency reached a nadir of 0.6403 after the headline on Trump signing the Hong Kong bill. NZ swap rates closed unchanged yesterday, while government bonds were 2- 3bps lower across the curve, the market being supported by lower Australian rates.
USD: The Dollar Index bounced back above the 98.00 handle following the release of positive US PMI data and had managed to hang on to such gain since, even as demand for refuge in the greenback faltered after President Trump signalled that a mini trade deal is in its “final throes”. Another busy week next week for the US full of top-tiered US data. We start the week with the key manufacturing gauge ISM manufacturing indexes followed by its nonmanufacturing counterpart on the next day. The preliminary readings of the Markit PMIs had turned out better than expected last week and investors are looking towards the official ISM prints to confirm the rebound in US activities. Construction spending, trade report and factory orders occupied the calendar in the middle of the week and we finish the week off with the all-important job report and University of Michigan Sentiment Index on Friday.
From a technical and trading perspective, I will be closely watching the close today in the NZDUSD as the monthly candle has the potential to confirm last months bullish key reversal, crucially a close today above .6393 would flip the monthly volume weighted average price bullish which could encourage further upside potential. Bulls would be encouraged by the fact that the pair has repeatedly tested and held support at the yearly S1 pivot and could be carving out a significant double bottom. If the monthly chart does flip bullish tonight, this could set a platform for prices to push higher with bulls eyeing the potential to test the Yearly Pivot towards the .6800 handle.
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