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NZD/USD Edges Slightly Lower, Holds Above Key Support

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The NZD/USD dropped 0.26% to 0.6233 on Monday as the USD gains support after decreasing expectations for an aggressive Fed rate cut in September, fed fund futures are pricing in 32bps of cuts or just a 30% cut of a 50bps cut. While the RBNZ has already begun cutting rates and is cutting pricing in roughly the same percentage for cuts at the next meeting further pressuring the NZD and contributing to the NZD/USD's decline.

  • In what was a subdued trading session due to the Labor Day Holiday in the US overnight the NZD/USD fell to a session low of 0.6221 before recovering into the close. Technical indicators suggest potential for a near-term correction, with the RSI is falling from overbought territory, now 65 while the MACD is showing decreasing green bars.
  • China's private Caixin PMI for August showed a slight improvement, moving from a minor contraction to a minor expansion, driven by increased output and new orders along with stabilized employment, although it remains well below the levels seen from February to May.
  • Initial support is now 0.6200 (Aug 27 lows) while below here 0.6153 (20-day EMA) becomes the target. Initial resistance is 0.6300 (Aug 29 highs) above here 0.6330 (Jan 1 highs).
  • RBNZ dated OIS is pricing was steady on Monday, with 31bps of cuts priced in for the October meeting, and 72bps priced into year-end, pricing did soften about 5bps through to July next year.
  • The NZ-US 2yr swap spread was unchanged at 16bps on Monday
  • Expiries: 0.5800 ($874.48), 0.582 ($838.21m), 0.5930 ($687.86m), 0.597 ($667.76m), 0.625 ($400m) for Sept 3.
  • Today, we have the 2Q Terms of Trade Index at 08:45 AEST
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The NZD/USD dropped 0.26% to 0.6233 on Monday as the USD gains support after decreasing expectations for an aggressive Fed rate cut in September, fed fund futures are pricing in 32bps of cuts or just a 30% cut of a 50bps cut. While the RBNZ has already begun cutting rates and is cutting pricing in roughly the same percentage for cuts at the next meeting further pressuring the NZD and contributing to the NZD/USD's decline.

  • In what was a subdued trading session due to the Labor Day Holiday in the US overnight the NZD/USD fell to a session low of 0.6221 before recovering into the close. Technical indicators suggest potential for a near-term correction, with the RSI is falling from overbought territory, now 65 while the MACD is showing decreasing green bars.
  • China's private Caixin PMI for August showed a slight improvement, moving from a minor contraction to a minor expansion, driven by increased output and new orders along with stabilized employment, although it remains well below the levels seen from February to May.
  • Initial support is now 0.6200 (Aug 27 lows) while below here 0.6153 (20-day EMA) becomes the target. Initial resistance is 0.6300 (Aug 29 highs) above here 0.6330 (Jan 1 highs).
  • RBNZ dated OIS is pricing was steady on Monday, with 31bps of cuts priced in for the October meeting, and 72bps priced into year-end, pricing did soften about 5bps through to July next year.
  • The NZ-US 2yr swap spread was unchanged at 16bps on Monday
  • Expiries: 0.5800 ($874.48), 0.582 ($838.21m), 0.5930 ($687.86m), 0.597 ($667.76m), 0.625 ($400m) for Sept 3.
  • Today, we have the 2Q Terms of Trade Index at 08:45 AEST