NZD Tumbled As Data Confirmed RBNZ Intervention
ActionForex | Sep 29, 2014 04:58AM ET
The New Zealand dollar dropped sharply as the week opened on RBNZ intervention. RBNZ released today showed it sold a net NZD 521m of the currency in August and that was the largest amount since July 2007. RBNZ governor Graeme Wheeler already warned last week that the exchange rate was unjustified and unsustainable. The view was shared by Prime Minister John Key who said that the so-called Goldilocks levels for Kiwi is around USc 65 and it's logical for RBNZ to intervene. NZD/USD dived to as low as 0.7707 so far today, comparing to last week's close of 0.7859. Weakness in Kiwi also dragged AUD/USD down to as low as 0.8683 so far, comparing to last week's close of 0.8764.
Technically, the strong break of the long term channel support as seen in the weekly chart of NZD/USD indicated that that fall form 0.8835 is likely the third leg of the consolidation from 2001 high of 0.8842. Near term focus will now be on 0.7862 support. Break there will target 0.7370 support, which is close to 38.2% retracement of 0.4890 to 0.8842 at 0.7332. Based on current momentum, NZD/USD would likely take out this cluster support and target 50% retracement at 0.6866.
Elsewhere, the economic calendar is rather busy today. UK will release mortgage approvals and M4. Eurozone will release confidence indicators and German CPI. US will release personal income and spending as well as pending home sales. Nonetheless, the bigger events are scheduled for the latter part of the week. In particular, dollar will face the tests of consumer confidence, ISM indices and NFP. Sentiments towards the greenback is leaning towards the upside, meaning that strong data would push dollar higher but weak data could have mild impact. ECB meeting could be a non-event after last month's surprised announcement of additional easing. Sterling will look into PMI data for strength against Euro. Meanwhile, Aussie will look into retail sales, trade balance as well as China PMIs. Here are some highlights for the rest of the week:
- Tuesday: Japan household spending, unemployment, industrial production, retail sales; China HSBC manufacturing PMI; Swiss KOF; German unemployment, Eurozone CPI; UK GDP final; Canada GDP; US consumer confidence;
- Wednesday: Japan Tankan; China manufacturing PMI; Australia retail sales; Swiss PMI; Eurozone PMI; UK manufacturing PMI; US ADP employment; ISM manufacturing
- Thursday: Australia building approvals, trade balance; UK construction PMI; Eurozone PPI, ECB rate decision; US jobless claims
- Friday: Eurozone services PMI; UK services PMI; Canada trade balance; US non-farm payroll, ISM services
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