NZD retrace back. The kiwi dollar rallied after the upbeat labor market data on Tuesday but retraced fully back to 0.6530 levels.
In June quarter the unemployment rate lower to an 11-year low of 3.9% down from 4.2% in March 2019.
“This is the lowest unemployment rate since the June 2008 quarter, when it was 3.8 percent.” Stats NZ reported. The official report also said that “The rise in the minimum wage helped lift labor cost index (LCI) salary and wage rates (including overtime) 0.7 percent in the June 2019 quarter”.
In the day ahead, kiwi traders focus on RBNZ’s Monetary Policy statement this afternoon at 2.00pm local time. Most of the analysts expect a 25bps rate cut to record low to 1.25 and maintain a dovish stance. However, today’s rate cut is fully priced by markets.
NAB said, “A rate cut is fully priced by markets and 86% of economists also agree which would take the cash rate to a record low of 1.25%. Given the strong labour market figures yesterday (unemployment fell to 3.9% against 4.3% expected), the focus will be on the framing of the prospective cut and how far the RBNZ is willing to cut on a deteriorating global outlook”.
Turning to technical view, NZDUSD has spotted a triple bottom formation between 0.6490-0.6480 below here 0.6420/0.6400 exists, Oct 2018 low. Interestingly RSI is recovering from oversold and the oscillator is remaining bullish.
Ahead of today’s RBNZ meeting supports located at 0.6500 and 0.6480. As long as 0.6480 holds, watch out for Tuesday’s high.
Flipside, incase of an ultra-dovish a deep cut could be expected in the coming days towards 0.6390 and 0.6350. A weekly close below 0.6420/0.6400 strengthens this view.
In AUDNZD, a decisive breakout above 1.0400 needed to rally further to 1.0450.
GBPNZD: A decisive breakout above 1.8760 needed to rally further to 1.8900 and 1.8950.
NZDCHF: Support zone remains between 0.6300-0.6320 <0.6200 and 0.6050 exists. If moving higher, a decisive break out above 0.6430 could extend the headroom towards 0.6500/0.6520 levels.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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