NZD/USD Struggles Above 0.6150, BNZ Raises Milk Price Forecast

NZD/USD closed little changed on Wednesday, up just 0.06% at 0.6158 after hitting a session and new cycle high of 0.6178 with the slight pullback largely due to a small bounce in the USD with the BBDXY bouncing off new lows at 1,228.00 before closing the session unchanged at 1,230.07.

• Overnight, the BLS annual payrolls benchmark figured were released, although delayed and came out at a revision of 818k jobs the figure was within estimates although closer to the more bearish of estimates, with these figures the worst since 2009.
• Initially there was little reaction to the NZD/USD before the USD started to sell-off as the market then turned to the FOMC minutes. The pair has now now rallied over 5% from the lows made on August 5th and trades well above all key moving averages, the MACD is at its highest level for the year, while the 14-day RSI is now at 65, the 0.6150-0.6200 an area the pair has struggled to trade above this year.
• Initial resistance is 0.6200 (round number) above here 0.6220 becomes a target, a level we have failed to break above four times since falling below it January. Support now rests at 0.6100 (round numbers) with 200-day EMA at 0.6068 and 100-day EMA at 0.6055 seen as the next support zone
• BNZ economists have raised their 2024-25 milk price forecast by 30 NZ cents to NZ$8.50 per kilogram of milksolids, citing a 35% year-over-year increase in the GDT price index and potential upside risk to Fonterra's current NZ$8 forecast.
• RBNZ dated OIS is pricing in 33bps of cuts at the October meeting and 74.5bps of cuts by November.
• The NZ-US 2yr swap spread rose 4bps on Wednesday to 6.5bps and now trades right in the middle of the monthly range.
• Expiries: 0.5940 ($410m), 0.5920 ($300m), 0.5720 ($400m) for Aug 22nd
• Today, The calendar is empty