NZD/USD Continues Bounce Off YTD Lows, Back Above 0.5950

The NZD had another strong session, trading up 0.81% to 0.5951. In the FX space on Wednesday focus was on the Yen after it rallied 1.90% on the back of the BoJ decision, the Fed left rates on hold but kept the door open for a cuts in September, risk markets rallied overnight with the Nasdaq up about 2.60%.

• The NZD/USD broke above initial support of 0.5950 earlier and is now 1.50% higher Monday's lows of 0.5858.The RSI indicator has jumped from 24 to 40 over the past few days indicating bearish momentum is slowing while the MACD is showing decreasing red bars.
• Looking at technical levels, a break below 0.5888 (July 31 lows) would open a move to 0.5858 (July 29 / ytd lows). Initial resistance is 0.5990 (20-day EMA).
• House prices fell for the fifth consecutive month in July, dropping 0.5% from June, due to rising unemployment and a sluggish economy. Since February’s peak, values have declined by 2.5%, remaining about 16% below the January 2022 peak, but still 19% higher than pre-COVID levels.
• The OIS market is a softer into the August meeting with just a 64.5% chance of a cut now, while we have firmed into year-end with a cumulative 79.2bps of cuts now priced.
• The NZ-US 2yr swap spread have bounced off recent lows of -16bps, and now sits at 2.5bps.
• Today, New Zealand has the 30. 34 & 37 Bonds auction.