The New Zealand dollar continues to be a worry for the NZ economy as of late as it continues to be relatively strong against its major trading partners despite the recent weakness in the economy. Recent data from consumer sentiment showed a dip over last month as it came in at 109.6 (prev month 110.7) this has not caused large shockwaves through the trading community this far, but credit card spending dipping to 7.3% (8.9% m/m) was also a disappointment for traders who were solely focused on the consumer aspect of the economy.
On the chart the NZDUSD has pushed through the recent high resistance level at 0.6861, but this has been met by staunch selling as many believe the current NZDUSD is overvalued, myself included. The drop on the charts is a result of the fact that the NZ economy continues to remain quite weak, and the drop in commodity prices is having a large effect for NZD. Also the Reserve Bank of New Zealand is expected to further weaken interest rates if inflation remains in control, and so many traders are now expecting that the NZDUSD will fall further on the charts. When it comes to support on the charts I am still focused on the 20 day moving average and also the 50 day moving as they both are looking like they could act like dynamic support in the current market, and the NZDUSD has a history of using these as dynamic support previously on the daily chart.
Across the ocean in Japan and things are still a mixed bag when it comes to Abenomics as all industry activity was down to -0.9% m/m (1.9% m/m exp) and this will continue to be a concern for the Japanese government as of late, as it continues to look to revive its fortunes. The push lower so far on the charts by the USDJPY is a little surprising and I would expect that Kuroda might look to intervene here by jawboning in order to prop back up the value of the USDJPY as the market looks to test how far it can fall at present.
Looking at the USDJPY it has so far remained under pressure on the charts and the bears are looking very much in control as of late. Support at 111.051 has looked very strong, but the recent tests of the level and attempts to push through should be taken as a warning sign that the market could move lower than expected, especially with the recent weakness in the USD. For now though, support has held in the short term, and there is a resurgence in the USD against the Yen, but I would expect the 20 day moving average to act as dynamic resistance on the chart, as much like previously it has used this as a key level when looking to pullback.
Finally, for many traders silver is quite advantageous, but the recent push on the charts has been very bullish and the higher highs on the candle sticks are promising. Resistance at 16.189 is starting to look like a very key level, and I would expect the market to target this level in the very near future, especially given the recent dovish tone of the FED and people looking to hedge themselves with global uncertainty.
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