NZD/USD – Sell the Pop?

NZD/USD – Sell the Pop?

The kiwi dollar has topped out forming a double top at the 7000 figure and is now in a clear distribution channel. Although the pair sports the best yield in the industrialized world the yield is very likely to but cut sooner rather than later.

The pair popped a bit on talk from the RBNZ that they may focus on macroprudential tools to manage the slowdown in housing and the dairy sectors leading the market to believe that the yield will stay in place for a bit longer, but whatever actions RBNZ takes, they will likely be forced to cut rates at the next meeting as the slowdown from China is clearly starting to weigh on the New Zealand economy.

The kiwi could rebound a bit on a short covering rally, but the pair faces stiff resistance at the 6900 figure and even greater selling pressure at 7000 level so any pop is likely to be a good opportunity to reestablish shorts for another run at the 6500 handle.

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