Daily Outlook

AUD/NZD strength may continue following the 250 pip rally at back end of last week as poor New Zealand trade balance data this morning missed forecasts by 530m. Details for this depict Milk powder exports fell to their lowest level since August 2009 as both China and the United Arab Emirates saw a drop in both value and quantity by almost half. Although the miss was of relative size market movements have been subdued as the fall in export values comes off the back of high June quarter numbers. Sentiment is further restrained as a fall in meat exports follows a record high meat season last year. ABN Ambro targets 1.07 in the coming weeks.

FOMC provided the expected hold in rates at the September meeting keeping the dovish rhetoric focusing on upcoming data as the main factor for December rate hikes. Most of this will come at the beginning of next month, but in the meantime outlook is neutral as doves and hawks battle in an environment soon to be dominated by the US Federal election.  Tomorrow marks the first Presidential debate.

After a poor week GBP/USD ended Friday under 1.3000 struggling even as BOE governor Carneys’ acknowledgement of the continually positive data seemingly unaffected by Brexit thus far. Inside sources have indicated article 50 will be triggered come February, and so the debate over the government’s policy to leave in a hard or soft manner is now the main element splitting opinion over the long term success of the economy whilst Boris Johnson referenced the huge amount of work necessary “to get our ducks in order”. Markets acknowledge the huge upside potential but there is a lot standing in the way, consequently, attitude remains cautious and bearish.

Key Speakers this week include the head of the three main central banks with no surprises anticipated. BoJ Governor Kuroda speaks today in the Asia, Draghi this evening who should shed some light on the ECB attitude towards extending asset purchasing in 2017. Janet Yellen on Thursday testifying before congress about the economy and the FED’s monetary policy.

AUD/NZD 9/23/2016 11:47 AM  Trend daily chart (=)  Trend weekly chart (=) AUD/NZD intraday: the RSI is overbought Our pivot point is at 1.0490. Our preference:the upside prevails as long as 1.0490 is support. Alternative scenario: the downside breakout of 1.0490 would call for 1.0470 and 1.0460. Comment: the RSI is trading above 70. This could mean that either the pair is in a lasting uptrend or just overbought and that therefore a correction could shape (look for bearish divergence in this case). The MACD is above its signal line and positive. The configuration is positive. Moreover, the pair is above its 20 and 50 MAs (respectively at 1.0451 and 1.0377). Supports and resistances: 1.0580 ** 1.0560 * 1.0560 ** 1.0550 1.0513 last 1.0490 1.0490 ** 1.0470 * 1.0460 **

Ticker : AUDNZD

Regards,

Dominic Cook