NZDUSD has been trending higher on its daily time frame, moving inside an ascending channel and currently testing support. Price seems to have bounced off the bottom of the channel and is headed back to the top at the .7650 minor psychological level.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. The 100 SMA is holding as dynamic support for the time being but a larger pullback could find its way to the 200 SMA dynamic support just below the bottom of the channel at .7100.
Stochastic is moving higher, which confirms that buyers are taking control of price action. If sellers take over, however, price could break below the channel support and start a reversal.
Earlier today, the quarterly CPI report from New Zealand printed a stronger than expected 0.2% gain versus the estimated flat reading. This undermined RBNZ official McDermott’s remarks on weak inflation for Q3, signaling that the central bank might be in no rush to cut interest rates. Still, the latest reading was lower than the previous 0.4% gain.
Economic data from the US was weaker than expected on Monday, indicating a slowdown in the manufacturing sector. Industrial production was weaker than expected with a meager 0.1% uptick while the Empire State manufacturing index showed a surprise pickup in contraction instead of a return to industry growth.
US CPI reports are up for release today, with the headline figure likely to show a 0.3% increase and the core figure expected to post a 0.2% gain. Keep in mind that PPI readings beat expectations so there’s a good chance that the CPI reports could be stronger than expected.
As for the Kiwi, New Zealand has another Global Dairy Trade auction lined up today and it might show a rebound in dairy prices after posting a 3% decline in the previous instance. China has a number of top-tier reports namely its GDP, retail sales, and industrial production figures due in the next Asian session and might also influence demand for the commodity-related NZD.