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NZD/USD pressured by each FOMC and NZ GDP; Testing beneath 38.2% with sharp change in trajectory

NZD/USD has prolonged its publish FOMC slide to a low of zero.6762 following the GDP knowledge. 

The fowl at the moment trades at zero.6766 from an in a single day excessive of zero.6870.  Whereas the FOMC resolution was the primary occasion at present, the home markets have punished the fowl additional on a Q3 GDP +zero.three% q/q vs the zero.6% anticipated and 1.zero% in Q2.  For the y/y, up 2.6% anticipated 2.eight% y/y, prior three.2%, revised up from 2.eight%. 

The RBNZ had a forecast properly off the mark at zero.7% progress for Q3 which can lend assist for a decrease fowl on rate of interest differentials. “Market pricing for the OCR has already develop into a bit extra circumspect of late, in mild of the weaker world pulse,” analysts at ANZ defined. 

FOMC consequence

As anticipated, the Federal Reserve hiked charges following unanimous on the FOMC. Charges had been raised by 25 foundation factors to 2.25% – 2.50%. The Assertion got here with little new, repeating that dangers to the financial system seem ‘roughly balanced’ and can “proceed to observe financial and monetary circumstances for his or her results on the financial outlook.” Nevertheless, the Fed forecast two hikes in 2019, above the place the road has priced which fulled a rally within the dollar. There was additionally a lift to progress forecasts for 2020 however downgrades to 2018 and 2019 whereas inflation forecasts had been unchanged – (DXY rallied from 96.61 to a excessive of 96.96) – That could be a poisonous cocktail for threat urge for food and weighs on the excessive beta fowl. 

GDP forecasts:

2018 three.zero% vs three.1% 2019 2.three% vs 2.5% prior 2020 2.zero% vs 1.eight% prior


2018 1.9% vs 2.zero% prior 2019 2.zero vs 2.1% prior 2020 2.zero% vs 2.1% prior

NZD/USD ranges

Assist zero.6760 Resistance zero.6980

NZD/USD dropped again beneath the 38.2% fibo and now eyes a check of S3 and confluence with the 50-D SMA down at zero.6730. The prospects might be for a flight in direction of the 61.eight% Fibo at zero.7048 are lengthy gone and the 23.6% fibo is a extra doubtless state of affairs down at zero.6663. RSI and numerous indicators are leaning with a bearish bias, supporting the bearish outlook for forthcoming value motion. 

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