Key Points:
- Mixed technical readings present.
- Ranging phase likely this week.
- Little in the way of NZ news this week.
The kiwi dollar encountered significant losses last week, the vast majority of which occurred during Tuesday’s session. The marked tumble resulted from the latest GDT Price Index releases, which came in negative and ended the run of stronger outcomes. Additionally, an impressive US ISM Non-Manufacturing PMI result kept the selling pressure high as the week continued. Going forward, US data will be in focus this week, especially during Friday’s busy session.
The kiwi dollar remained under pressure throughout the entirety of last week, but its most substantial losses were accrued during Tuesday’s session. Opening the session up at around the 0.7274 mark, the pair slid by over 80 pips to the 0.7186 level by the end of the day. The tumble is largely attributed to the 3.0% contraction in the GDT Price Index, this being the first major slip for the figure since May. Furthermore, a US ISM Non-Manufacturing PMI result of 57.1 kept selling pressure high as the week continued.
Looking at the technical data now, the kiwi dollar has a highly bearish bias, but a falling wedge pattern could limit the downside risks to some extent. Specifically, after last Tuesday’s slip, the 12 and 20 day EMA’s are now extremely bearish. Moreover, the pair has moved below the 100 day moving average, which could prove to be a source of dynamic resistance. This being said, the NZD is now in rather close proximity to the downside constraint of the falling wedge structure which could see any potential losses muted significantly.
As we move forward, news is a little light on the New Zealand front and the NZ Business Manufacturing Index is really the only news worth watching on the Kiwi side of things. On the other hand, there is a range of US results that are worth monitoring, this being especially the case during Friday’s session. Specifically, both the US PPI and Retail Sales data is due alongside an announcement by Janet Yellen.
Ultimately, keep an eye on this pair as it is likely taking a short breather before resuming its near-term downtrend. However, also monitor the pair as it extends towards the upside constraint of the wedge as it could result in a breakout and subsequent uptrend. Such an uptrend could resume the long-term bullishness that has been seen over the past number of months and, as result, is worth keeping in the back of one’s mind.