So according to Governor Wheeler, RBNZ have an option of intervening in the currency market to slow down the ravaging NZD. This was unexpected despite not coming during the presser but during his testimony in parliament. RBNZ feels that there is a need for a lower exchange rate to bolster trade and at least help in jerking up the low inflation which is projected to trend lower in the coming quarters. Overly, they think the economy will expand towards and above the 3% ideal mark but this will happen as inflation remains low. On the other side, the USD is finding it hard to add to its gains even after a strong NFP. We saw Thursday’s PPI turning lower in July at -0.1 and unemployment gains rising to 244K from 241K recorded last week. Dudley remains skeptical of the current rising interest rates and this was in tandem with other officials who view the current low productivity to slow down job and wage growth. Today’s CPI will be a market mover and this is why I’m shorting the NZD and trading according to the following technical considerations.
As you can see, there is a sell signal printed in the 1HR chart and that is what is visible in the weekly chart. Stop loss should be at the minor support turned resistance at 0.7311 and aim for 50 pips.
Trade as follows:
Stop Loss: 0.731
Take Profit: 0.723
Have a good day and a nice weekend.