NZD/USD Losses Accelerate as RBNZ Endorses Dovish Outlook

Talking Points:

USD/JPY Holds Monthly Opening Range Ahead of Fed Event Risk.

NZD/USD Losses Accelerate as RBNZ Endorses Dovish Outlook.

DailyFX

USD/JPY Daily

USD/JPY Daily Chart

Chart – Created Using Trading View

  • The unsuccessful exam of a monthly opening operation might coax range-bound prices in USD/JPY as marketplace courtesy turns to a slew of Fed tongue on daub over a residue of a week; broader opinion stays slanted to a downside as cost a Relative Strength Index (RSI) safety a bearish formations from progressing this year, with near-term insurgency holding during 104.20 (61.8% retracement).
  • With Fed Funds Futures now highlighting a 70% luck for a Dec rate-hike, uninformed comments from a 2016 voting-members (New York Fed President William Dudley, Kansas City Fed President Esther George, Boston Fed President Eric Rosengren and Chair Janet Yellen)may fuel a near-term allege in USD/JPY should a uninformed collection of executive bank tongue boost interest-rate expectations; however, a span might continue to come off of a monthly high (104.15) should a pivotal officials validate a ‘gradual’ trail in normalizing financial policy.
  • Will keep a tighten eye on a slight range, with a break/close next 102.60 (38.2% expansion) lifting a risk of a pierce behind towards 102.10 (100% expansion), followed by 101.20 (50% expansion).

NZD/USD Daily

NZD/USD Daily Chart

Chart – Created Using Trading View

  • NZD/USD extends a waste from progressing this week as Reserve Bank of New Zealand (RBNZ) Assistant Governor John McDermott endorses a dovish opinion for financial process and reiterates that a ‘current projections and assumptions prove that serve process easing will be compulsory to safeguard that destiny acceleration settles nearby a center of a aim range,’ and a New Zealand dollar stands during risk of confronting a serve decrease over a days forward as a head-and-shoulders tip arrangement appears to be panning out; totalled pierce highlights a risk for a mangle next a 0.7000 handle.
  • Growing conjecture for another rate-cut during a RBNZ’s final 2016 process assembly on Nov 10 might continue to drag on a sell rate, with a region’s 3Q Consumer Price Index (CPI) news due out on Oct 18 expected to figure marketplace expectations as a executive bank struggles to grasp a 1 to 3 percent target-band for inflation.
  • Will keep a tighten eye on a RSI as it flirts with oversold territory, with a break/close next 0.7050 (78.6% retracement) lifting a risk for a pierce behind towards a Fibonacci overlie around 0.6950 (38.2% retracement) to 0.6970 (50% retracement) that coincides with a Jul low (0.6950).

DailyFX SSI

  • The DailyFX Speculative Sentiment Index (SSI) shows a USD/JPY ratio continues to slight from a 2016 impassioned of +6.03, while traders have flipped to net-long NZD/USD during a second-full week of October.
  • USD/JPY SSI now sits during +1.37 as 58% of traders are long, with brief positions 8.7% aloft from a prior week, while open seductiveness stands 10.8% next a monthly average.
  • NZD/USD SSI now sits during +1.47 as 60% of traders are long, with prolonged positions 32.4% aloft from a prior week, while open seductiveness stands 1.3% next a monthly average.
  • Will keep a tighten eye on a allege in NZD/USD SSI as a sell appears to be stranded on a wrong side of a marketplace following a near-term decline.

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— Written by David Song, Currency Analyst

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