Yesterday, this pair moved an incredible 150 pips as a result of that unexpected rate cut by RBA and then later withthe fall in dairy prices to -1.4% but after today’s unemployment and employment rate data release, we saw a relief and a small spike in this pair. These are the snapshots from the news release-first the employment growth in the first quarter represented one of the biggest gains since Dec 2004 with labor force specifically increasing to 38000 representing a 1.5% increase. This is due to increased immigration which fueled this growth and at the same time causing the inflation to rise by 0.4%, which translates to a 1.6% annual rate. Secondly, from the GDT Price index, there are indications that the US Cheese inventories, which weighed in in the price slump-is at its 10-year high inventory levels and this means one thing, we shall see a continuous reduction in dairy price indices in the coming few weeks as the markets try to deal in with the glut. Now with these fundamentals, let’s see what happened on the charts:
Daily Chart Analysis
Back from the Double Tops which was confirmed after yesterday’s close, we are now in the right leg of the M-Formation and prices are trending in the 5-month resistance-turned support levels. The stochastics are indicating a reducing momentum and this is supported by the recently formed negative slope of the OBV. Since price follows volume, we shall be looking for a bearish momentum so long as the fundamentals are in sync with our forecast. This will be further cemented especially if price breach the 0.687 area and then close below the support trend line which has been an important level since the beginning of the year.
Fundamentals are pointing out a reduced momentum and gain of the NZD, GDT price index reduced for the second consecutive week and this time it dropped by 0.8% and with indication of oversupply as shown by the US cheese inventories, price will drop as the market tries to create demand for these products. Next, we saw that the export prices fell by 2.2% representing a successive decline and erasing grounds made in the last two months and at the same time, the non-dairy prices declined by 0.3%. These indications are definitely not good for the NZD and this means we shall be gearing in for bearish momentum.
4HR Chart Analysis
The current support line in the daily chart-at 0.687 is a very sensitive level, we can see that price recoil after momentarily hitting it and formed that lower wick meaning that there were some buying pressure. Today, we shall be watching for activities that can trigger a break below this price level and by extension the support trend line which is very clear in this chart. This will be true, considering how the momentum and OBV are behaving as they are moving in from the overbought regions of the stochastics together.
15 Min Chart Analysis
Technicals are pointing to a buy at the moment and the current support/resistance clear in the daily chart is proving once again to be a good support level. Price has been consolidating after the very bearish Asian session. In my opinion, price will likely correct to the 61.8 Fibonacci Level today before resumption of the bears in the New York Session there about. We shall be watching the ADP Non-Farm Employment change which is forecasted at 205K up from 200K and it will be released at 1215 GMT and then later the Crude Oil Inventories will be released at 1500 GMT and is forecasted at 0.6M from last week’s 2.0M barrels.
Have a pipful day