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IronFX Intraday Comment | NZD/USD | 09/11/2015

• The dollar traded unchanged against most of its G10 peers during the European morning Monday, in the absence of any major market moving events today. The greenback was slightly lower against EUR, while it was marginally higher vs NZD and JPY.

• The NZD came under renewed selling interest after the country’s biggest trading partner, China, disappointed once again with its trade data released during the weekend. China’s exports fell 6.9% in October, while imports plunged 18.8%, reinforcing the view that more has to be done to stimulate the economy. Overnight, we get China’s CPI and PPI data for October. The CPI is expected to have slowed, while the PPI is forecast to have declined albeit at a slower pace than in September. The soft data suggest that China might be getting less support than hoped from the measures taken so far, which keeps the door open for further stimulus in the foreseeable future. As a result, Australia and New Zealand, whose economies are heavily dependent on exports to China, could see their currencies weakening further. We expect NZD to suffer more since the prospect for a rate cut by Reserve Bank of New Zealand (RBNZ) is still intact.

• NZD/USD traded slightly lower during the European morning Monday after it hit resistance fractionally below the 0.6570 (R1) obstacle. The price structure on the 4-hour chart is lower peaks and lower troughs and this keeps the short-term outlook negative, in my view. However, I would like to see a clear move below the psychological zone of 0.6500 (S1) before getting more confident on the downside. Such a break would confirm a forthcoming lower low and could initially aim for our next support of 0.6455 (S2). Our short-term oscillators give evidence that the pair could correct a bit higher before the bears decide to shoot again. The RSI exited its below-30 territory and is pointing north, while the MACD has bottomed and could move above its trigger line any time soon. As for the broader trend, the decline started on the 15th of October makes me believe that the 23rd of September-15th of October advance was only a corrective phase of the prevailing longer-term downtrend. Nevertheless, a clear close below 0.6240 is needed to confirm the resumption of that down path.

• Support: 0.6500 (S1), 0.6455 (S2), 0.6390 (S3)

• Resistance: 0.6570 (R1), 0.6640 (R2), 0.6700 (R3)

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