The Reserve Bank of New Zealand (RBNZ) increased its benchmark rate for the first time in seven years and signalled further tightening. Economists at HSBC expect the next 25bp hike to come in November 2021, with further hikes due next year. What’s more, they still look for modest NZD weakness against the USD over the next 12 months.

Near-term, the established 0.6860-0.7000 range may hold much of the price action ahead of the FOMC minutes, which will be released mid-week.”

“Despite the payrolls miss, the fall in the unemployment rate and strength in average earnings growth helped to keep expectations over a Fed tapering announcement in November intact. That is well discounted and in the very short-term, DXY also looks confined to a 0.9350-0.9450 range.”

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

 The NZD/USD pair held on to its modest intraday gains through the early part of the European session and was last seen trading near daily tops, just below mid-0.6900s. NZDUSD is trading at 0.6936; the instrument is moving below Ichimoku Cloud, thus indicating a descending tendency. The markets could indicate that the price may test the cloud’s downside border at 0.6940 and then resume moving downwards to reach 0.6765.

Another signal in favor of a further downtrend will be a rebound from the upside border of the Triangle pattern. However, the bearish scenario may no longer be valid if the price breaks the cloud’s upside border and fixes above 0.7020. In this case, the pair may continue growing towards 0.7125. To confirm further decline, the asset must break the pattern’s downside border and fix below 0.6845.

NZDUSD

Oct 11 2021