NZD rally runs out of puff

The Opening Bell: Where currencies start on Wednesday, February 25, 2015

Currencies

The Opening Bell: Where currencies start on Wednesday, February 25, 2015

25th Feb 15, 9:08am by Dan Bell

The NZDUSD opens at 0.7467 (mid-rate) this morning.

The NZD lost ground against all its major trading partners after the release of yesterday’s disappointing inflation data, however the NZD has managed to rebound against the USD following Yellen’s testimony to the Senate Banking Committee.

Federal Reserve Chair Janet Yellen indicated that the Fed is not likely to begin raising interest rates for at least the next couple monetary policy meetings and that the FOMC will remove the word ‘patient’ from its policy guidance before the first rate hike.

Global equity markets are broadly higher - Dow +0.35%, Nikkei +0.74%, Shanghai Closed FTSE +0.54% DAX +0.67%, CAC +0050%.

Gold prices fell back below $1200 currently trading at $1196 (-$4.50), Oil prices are up 1% at $51.50 a barrel.

The current indicative mid-rates are:

NZDUSD           0.7467
NZDEUR           0.6585
NZDGBP           0.4831
NZDJPY              88.75
NZDAUD           0.9556
NZDCAD           0.9410

Domestic data releases today:
12:40 - RBNZ Gov Wheeler Speaks

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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here »

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

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2 Comments

by scarfie | 25th Feb 15, 10:21am 1424812887

Popped in to a currency trading site this morning and read this:

NZD/USD under pressure as New Zealand inflation expectations slipped to a 15-year low; downside targets looking increasingly favorable as it preserves the bearish RSI momentum carried over from the previous year.
With the Bank of New Zealand scheduled to testify in front of the Finance Select Committee, fresh batch of central bank rhetoric may put additional downside pressure on NZD/USD should Governor Graeme Wheeler fuel bets for a rate cut while retaining the verbal intervention on the kiwi.
Failure to test the former support region around 0.7600-20 may spur a further decline, but need a break and close below 0.7430-50 for conviction/confirmation.

On the chart it looks very much like a small rally within a larger downtrend and that doesn't change when a few indicators are applied.

by skudiv | 25th Feb 15, 11:43am 1424817825

I was thinking of transferring some USD over, but decided to wait 6 months, that was at 73c and of course it shot up to 75c a few days later. I don't think the reasons for the fall have gone away, as I see the USD strengthening for as long as the world is filled with uncertainty. Dairy prices will take a long time to recover so all we have left is a risky carry trade and an overcooked housing market keeping the NZD up. I'll be surprised if the NZD is still this high in 6 months.