The high flying kiwi is starting to fly very low as the NZDUSD came under further pressure on the charts, for the most part it has been a very bearish downtrend as of late and the Reserve Bank of New Zealand (RBNZ) ramped up the pressure today on the NZDUSD as it talked up the possibility of further easing. This is no surprise given the reliance on the Chinese and Australian economy, but there were some positives to take away with trade balance (-53M) being slightly better than expected and the fact the RBNZ though inflation would be modest despite the circumstances. However, all the talk about the bulls never came to fruition as the RBNZ also commented on the exchange rate saying at present it was overvalued and the market promptly agreed as the NZDUSD slipped down the charts almost a cent.
The NZDUSD now looks to be tempting the prospect of support at 0.6345 on the chart, and this could only be the start as the RBNZ continues to talk up the possibility of easing. Market sentiment is certainly in favour of this, as milk prices have continued to fall and a recent Fonterra statement out today called milk prices uneconomically sustainable at present, so the market could be due for a correction in the near future. The next level down from here is 0.6266 and the market could certainly push much lower as the sentiment is very bearish and it's coupled with a weaker than expected market at present.
Oil markets today coughed up no surprises as the statistics came out in surplus at 8.38M barrels overall, now this was not unexpected and many had been betting on a strong surplus after yesterdays API data which showed a strong prelim reading of 11M barrels. Despite this the market has been somewhat upbeat but has been held up on strong resistance at present at 32.15. I anticipate that this level will try and hold back markets from lifting any higher, but may be breached if we continue to see sustained pressure on this level.
Despite all the talk of a surplus with oil the real threat I feel at times is the fluctuations in the USD which are having a major impact currently in the price of oil. One could easily argue that USD movements are more impactful than data at present. Certainly the feeling with risk adversity is weakness in oil prices and a stronger USD as investors seeking safe havens has created a perfect storm and a push down to support at 29.49 is very much on the cards these days.
Lastly, gold has continued to rise on the back of global uncertainty and this could be one to watch in the coming days as it nears hard resistance at 1141. The market is certainly feeling the pinch of the USD but at the same time the Chinese slowdown has cast a dark shadow across the global economy and for some time now we will likely see pressure on precious metal markets as a result.
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