This morning’s RBNZ decision to cut rates caught traders and analysts off guard. The surprise move sent the NZD/USD tumbling from a pre-announcement level of 0.6790 to 0.66430. The central bank managed to accentuate the selling by pointing to the potential for further policy easing to ensure future inflation levels settle within their target range.
This decision has been driven by a deterioration in global economic data since the December meeting. The Reserve Bank cites further weakness in China, emerging markets, and slower growth in Europe as cause for concern. On a domestic level, a weakening dairy sector, decline in inflation expectations and housing market pressures act as serious headwinds to the New Zealand economy.
The AUD/USD reached new highs overnight, hitting 0.7526 as oil and copper strengthened and traders searched for yields in a negative interest rate environment. The Australian dollar has since retraced to 0.7476 as the market digests the RBNZ decision and its implications for future RBA decisions.
WTI Crude Oil hit $38.47/bbl overnight, pushing fresh three-month highs as US gas demand increased by 7% over the last month. This new-found strength combined with speculation on output freeze negotiations, overshadowed the continuing build in crude stockpiles as the EIA reports its fourth week of building to record highs.
Currency Updates:
EUR/USD Intraday: bullish bias above 1.0957.
Pivot: 1.0957
Our preference: long positions above 1.0957 with targets @ 1.1030 & 1.1060 in extension.
Alternative scenario: below 1.0957 look for further downside with 1.0940 & 1.0925 as targets.
Comment: the RSI is mixed to bullish.
Supports and resistances:
1.1100 ***
1.1060 ***
1.1030 ***
1.0972 Last
1.0957 ***
1.0940 **
1.0925 ***
USD/JPY Intraday: rebound.
Pivot: 112.70
Our preference: long positions above 112.70 with targets @ 113.50 & 113.80 in extension.
Alternative scenario: below 112.70 look for further downside with 112.20 & 111.85 as targets.
Comment: the RSI is bullish and calls for further upside. The pair has broken above the upper boundary of a bearish channel.
Supports and resistances:
114.27
113.80
113.50
113.30 Last
112.70
112.20
111.85
GBP/USD Intraday: bullish bias above 1.4170.
Pivot: 1.4170
Our preference: long positions above 1.4170 with targets @ 1.4275 & 1.4335 in extension.
Alternative scenario: below 1.4170 look for further downside with 1.4130 & 1.4070 as targets.
Comment: the RSI is mixed to bullish.
Supports and resistances:
1.4385 ***
1.4335 **
1.4275 ***
1.4180 Last
1.4170 ***
1.4130 ***
1.4070 ***
AUD/USD Intraday: the bias remains bullish.
Pivot: 0.7440
Our preference: long positions above 0.7440 with targets @ 0.7530 & 0.7560 in extension.
Alternative scenario: below 0.7440 look for further downside with 0.7410 & 0.7385 as targets.
Comment: even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
Supports and resistances:
0.7595
0.7560
0.7530
0.7470 Last
0.7440
0.7410
0.7385
SPI 200 (ASX) (H6) Intraday: the upside prevails.
Pivot: 5125
Our preference: long positions above 5125 with targets @ 5200 & 5225 in extension.
Alternative scenario: below 5125 look for further downside with 5075 & 5040 as targets.
Comment: the RSI is bullish and calls for further advance.
Supports and resistances:
5245
5225
5200
5169 Last
5125
5075
5040
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