Wednesday, October 5, 2022

New Zealand Dollar Rallies |


The had another sideways yesterday session, finishing unchanged at 92.07, before edging lower to 92.02 in Asia in directionless trading. The dollar index remains mid-point between its breakout at 92.60 and structural support at 91.50, also home to its 100-day moving average. A break of either 91.50 or 92.60 will signal the dollar’s next directional move.

and edged higher yesterday, rising to 1.1870 and 1.3930 in Asia, but remain in range-trading mode ahead of Friday’s US . fell 0.25% to 109.00 yesterday as US yields continued to soften. With JGB’s also easing today, USD/JPY has climbed back to 109.10, but as a yield differential play, the risks still favour a test of support at 108.50.

New Zealand job data sends kiwi higher

Themain mover has been the New Zealand dollar, which has spiked 0.60% higher to 0.7060 after stellar unemployment data had markets scrambling to price in an RBNZ rate hike this morning. Markets are also pricing in two more hikes before the year-end, and the kiwi is now set to outperform in the weeks ahead, especially against low yielders like the JPY, and . Against the greenback, the kiwi looks set to test resistance at 0.7100, opening up a further rally targeting 0.7300. looks like it will test the December 2020 lows at 1.0420 sooner rather than later. A weekly close below 1.0420 targets an extended move lower targeting 1.0000.

The remains in a holding pattern versus the US dollar at 6.4640 today, and I am not expecting any fireworks before Friday. The , , and remain under Delta-variant and political pressure in the regional space. The fourth member of the fragile four, the , rallied once again yesterday, supported by international inflows to the equity market and subdued oil importer buying. is approaching support at the 100-day moving average (DMA) at 73.865, and if USD/INR falls through it, the cross will target 73.60. Although fragile three doesn’t sound nearly as good, I may have to review its fragile four membership at that stage.

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