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NZD Underperforms Ahead of RBNZ, USDJPY Extends Losing Streak

FOREX
  • The softer USD backdrop has persisted into a fourth session, with the USD Index edging to the lowest levels since mid-may. The pullback after nonfarm payrolls has extended and the DXY has printed as low 101.67, narrowing the gap with the next major support of 101.03. The New Zealand dollar screens as the weakest in G10, interesting given the RBNZ decision is due overnight. New Zealand’s central bank is likely to remain on hold for the first time since August 2021.
  • USD/JPY typifies the soft USD theme, with the pair lower for a fourth consecutive session and attention firmly on support at the 50-day EMA that intersects around current levels at 140.34. A clear break of this average would strengthen bearish conditions, opening 139.85, the Jun 16 low and 139.18, the 38.2% retracement of the Mar 24 - Jun 30 bull leg.
  • AUD and EUR are also among the poorest performers in G10, with AUD/JPY a stand out cross at these levels: AUD/JPY is now on a five session losing streak, with the 50-dma the next level to watch at 93.439.
  • NOK tops the G10 FX table once more on Tuesday, extending Monday’s move following the higher-than-expected CPI for June and notable acceleration for core measures. USD/NOK has declined around 1.2% and has significantly narrowed the gap with the April lows of 10.2451.
  • A busy Wednesday is headlined by US inflation data as well as RBNZ and BOC rate decisions. There may also be comments from both RBA Governor Lowe and BOE Governor Bailey.
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