Today I will start my analysis with NZD, which is in focus because of the national elections in New Zealand. The last poll suggests that the National Party has the lead over the Labour Party with 47%. Analysts from Citibank cite a report that says there’s a possibility, in case of a victory, for the Labour Party to require the RBNZ to consider job market conditions when deciding over monetary policy. Labour Party is in favor of implementing policies to limit immigration. In such a situation, NZD may be restrained. RBNZ is expected to keep rates on hold until the end of the year.
Analysts from Bank of New Zealand suggest that if the FED goes on with rate normalization — meaning a rate hike in December and more hikes in 2018 — the market will be seen to under-price the change of FED hikes through the end of the year.
Based on their point of view, if they are right, the NZD could move under 0.70 next year and, if they are wrong, then easy US monetary conditions will support higher levels of risk appetite and a stronger NZD than expected.
Taking a look at NZD/USD on MN chart we see a possibility for a correction until 0.7705 even if it seems less likely until the end of 2017.
But it looks like we will have to wait a long time until NZD/USD reaches that level. Taking a closer look we have the H1 chart which to me is neutral. I have a scenario for a possible move, as shown in the image below, and if that move happens, I will look for a sell limit.
If NZD/USD doesn’t cross 0.7320 and then goes back to 0.7220, I will look for a sell limit at 0.7290. If NZD/USD reach 0.7320 and cross over 0.7345 I will probably look for a buying opportunity. Updates to come. I will wait for the first scenario and then take an action. Now for me NZD/USD is neutral.
If NZD/USD instead reaches 0.7320 and crosses over 0.7345, I will probably look for a buying opportunity. Updates to come. I will wait for the first scenario and then take action. To me, NZD/USD looks neutral right now.
Happy pips!