The New Zealand economy was positive today as exports received a much needed boost to 4.25B (4.03B exp), which showed that despite the recent downturn in the economy there is still positive signs for the New Zealand economy. The recent boost to the NZ economy, coupled with a profit from the largest company in NZ Fonterra will bode well for the primary economy. However, the long term effect on the economy will be from the Reserve Bank of New Zealand, which has so far signalled that there will be further cuts to the Official Cash Rate, which will in turn have a bearish impact on the NZ currency. At the same time the USD has shown itself to be very strong as well at times, and I would expect in the rest of the week that we will see the USD take control here after the NZ economic data has so far exhausted itself.
The NZDUSD has so far remained quite bearish despite the recent circumstances which have been positive. The recent touch on support at 0.6679 has seen the market pull back as the bears are not completely in control. In the long run though the recent RBNZ expectations will have a negative effect on the NZ economy and expectations are that the NZDUSD will fall further and the recent touch on support is just the beginning. The next level down is 0.6572 and I would anticipate this level would hold up quite strongly to pressure.
Oil has once again been in the spotlight after the recent US oil inventory data which showed a strong surplus of 9.36M barrels (2.81M barrels exp). Despite all of this, which should in turn lead to a bearish effect the market has so far been focused on the upcoming IEA in Doha, which has so far been negative as the recent talks have led to nothing positive, as Iran has pulled out and is looking to pump as much oil as possible and at the same time Libya has also been negative about the idea of halting oil production. However, in the long term the market is looking for something positive to come about in the short term and that prices could be further boosted. I am inclined to believe that is not the case, given how fragmented the oil market is at present and how many suppliers are still compete against each other.
On the charts oil (WTI) is looking all the more bearish as it has rejected of the recent resistance level at 40.39. If there is an agreement there could be a breakout higher which could see prices push to 41.42 but this is looking very unrealistic at present. If there is a rejection of the agreement I would expect at a fall to support at 38.06 on the chart and more below this as the increase of supply will have a negative effect on oil prices in the long run.
Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.