The Reserve Bank of New Zealand (RBNZ) has kept the status quo and paused the button on further monetary policy movements, keeping the interest rate flat at 1.75%. This was in line with analysts' expectations as the RBNZ believes in keeping monetary policy accommodative at present after some minor shocks in the economy. However, the news was certainly mixed as the RBNZ reported that it expects headline inflation to decline in the coming quarters - now this may be a response to a higher NZD or it could be based on other events. It poses the question though will inflation remain around the 2% band or are we likely to see markets start to worry over the effects of the NZDUSD. As usual the RBNZ also threw in the need to jawbone the NZD too, to little effect; the markets have in turn jumped higher on the basis of it being in line with expectations. Only strong dovish comments were ever really going to move the NZDUSD lower, but the reality is that the trend remains quite strong at present for the bears.
Chart wise after the jump it touched on resistance at 0.7367 before pushing back down as traders read into the message a little more. While only a small jump, it does present a case that the bears are still lurking and looking to stop any forward momentum as the USD has firmed up a little better. If the NZDUSD was to fall further on the charts I would expect support at 0.7323 to be the main factor in preventing lower movements, however if we did see other extensions then a push down to 0.7288 and 07238 could very much be on the cards. Any pushes higher for the NZDUSD are going to struggle to break through the psychological barrier of 74 cents at present as the market continues to look less bullish than before.
Gold markets are looking very buoyant as the US turmoil continues to add pressure on markets. For a while we saw gold bears sell heavily as it double topped and the markets looked to increase their risk appetite, however, in recent days it's become clear that risk adversity is creeping back into the market. For traders looking to hedge gold has always been a key metal that many look to for guidance and protection in terms of uncertainty and it could very well be the case based on what we are seeing from markets.
On the charts gold has pushed through resistance at 1258 like it was non-existent, after also bouncing of dynamic support at the 20 day moving average. It's now looking very aggressive after today's weakness in the US economy coupled with FBI raids, and looking to target the key resistance are at 1295. This level has previously been very strong and I would struggle to see it being broken unless there was some massive US political upheaval in the short term.
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