The Aussie and Kiwi dollar both climb 0.60% against the most trades currencies on today Asia session. The cross AUDNZD remain neutral and manages to hold the 20&50MA.

RBNZ Governor Spencer delivered a speech to the Institute of Directors titled “Low inflation and its implications for monetary policy”.

After the press release the kiwi dollar soars 0.60% against the most traded currencies, but gains are limited against the Aussie dollar. The Speech was considered as hawkish and the FX market reacted inline with our bullish NZD forecast. RBNZ’s  flexible inflation approach cause the kiwi dollar to popup.

Spencer said,  “The changes in domestic pricing behavior are causing our flexible inflation targeting approach to become more flexible. In pursuing our long-term price stability objective, relatively more weight is being attached to output, employment, and financial stability. However, this can only be sustained if monetary policy’s long-term price stability credentials are maintained”.

The strong October Aussie retail sales help the AUD to rebound to the Friday’s high (Dec 01). Australian retail turnover rose 0.5 per cent in October 2017. Current account deficit decreases to $9.1 billion in the 3Q.

The gains were lifted above  Friday’s high after RBA left the interest rates at 1.5%.

RBA governor Philip Lowe said the Australian dollar remains within the range that it has been in over the past two years. An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.

  • The central forecast is for GDP growth to average around 3 per cent over the next few years.
  • Business conditions are positive and capacity utilisation has increased.
  • The outlook for non-mining business investment has improved further, with the forward-looking indicators being more positive than they have been for some time.

FX Outlook

Ahead of the BoC rate decision (Wed), we focus on AUDCAD and NZDCAD. Though recent Canada economic data were positive we believe BoE will leave the interest rates unchanged.

Also read AUDUSD and NZDUSD technical forecast in KTM blog. 

AUDCAD: It has a parallel support finds at 0.9610 and 0.9595. Additional support finds at 0.9550 it’s 100.0fe (weekly). Medium term support finds at 0.9510/0.9500 and 0.9400

Near-term resistance seems at 0.9700 it’s 20MA above this 0.9730 and 0.9750 exists. A strong close above 0.9750 could open to 0.9800 and 0.9850.

NZDCAD: Near-term support finds at 0.8640 fails to hold could drift further to 0.8590, 0.8560 and 0.8500. At higher time frames between 0.8600 and 0.8500 offering potential support. Weekly trading range remains between 0.8900 and 0.8580.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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