It's been a big day for the commodity currencies as they have taken a beating from economic data which shook up the charts and lead to some large sell-offs.
The NZDUSD this morning was under pressure as the Reserve Bank of New Zealand (RBNZ) finally cut rates from 3.25% to 3.00%. For the most part this was as expected, as the current predicament for the New Zealand economy looks quite weak at present. With ever lower milk prices and commodity prices in general suffering the export economy is under pressure to perform so the rate cut will provide some short term relief in the economy.
Despite the rate cut the movement has not been sustained and instead we can see the NZDUSD currently sitting just under resistance at 0.6634, I would expect further downward pressure despite the quick pullback up the charts. Economically speaking there is nothing to sustain further momentum higher, and not even some talk from various economists is not going to stop this pain train as it sinks lower.
The Aussie dollar was also caught on the back-foot as CPI data came in weaker than expected at 0.7%. This was somewhat expected and I mentioned yesterday the fact that weaker data should be expected for the most part. Strong resistance at 0.7432 didn't help the case for the possibility of a rise and this CPI data is almost a nail in the coffin for the AUDUSD at present, and it's likely that we could see further dipping from the weak AUD against most major pairs.
The USDCAD is currently pushing on strong resistance at present. Many will be watching this level closely and for me it seems a little too strong to break at this stage, and markets may be positioning themselves for a pullback. I still believe that further bullish movement is the only outcome for this pair especially with the weak oil prices now coming into play.
Touching on oil (WTI) above; it's worth talking about it now. Currently we have seen the bears return to the market and this is quite interesting because we tend to see prolonged waves in the market and with Iran it's adding more pressure. So when looking for targets strong support at 44.33 is likely to be the candidate oil will move towards. After this it we markets will be focused on total oil supply and demand out of the market as with Iran there we could see equilibrium disrupted yet again in the marketplace.
Lastly US existing home sales were quite impressive on the market today as they pushed up to 5.5 million. This is no surprise as the US has been swinging back into shape for the most part. What is worth focusing on now is the upcoming US unemployment data which will have a big swing on commodities and indexes which are very sensitive to labour data out of the US.
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