NZD/USD – More Losses Likely

NZD/USD – More Losses Likely

NZD/USD – More Losses Likely

The biggest loser of the week was the New Zealand Dollar, which continued to feel the sting of the Reserve Bank’s decision to provide an update on the economy on July 21st. The last RBNZ meeting was in June and the next meeting will be in August but the central bank’s unusual decision to provide an economic update makes us worried that they may have concerns about the economy. There’s no question that the New Zealand dollar is strong and the central bank does not want to see it rise further over the next month especially since low inflation is a problem according to RBNZ Assistant Governor McDermott who spoke this week. At the same time, house prices are too high in New Zealand, which keeps the central bank’s hands bounded for the time being. New Zealand consumer prices and service sector PMI are scheduled for release on Sunday – two pieces of data that could have a meaningful impact on the currency.

Technically support for NZD/USD is at 0.7080. If this level is broken, the next stop should be 0.7000. If NZD/USD holds 0.7300 cents, near term resistance is at 0.7200 with more significant resistance at 0.7300.

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