NZD/USD fell to lows amid weak CPI, AUD/USD down after RBA Minutes
InvestingOnline.com
17/07/2018, 01:48The New Zealand dollar reacted to the downside against the US dollar following a weaker than expected inflation for the second quarter of the year. However, the pair bounced hard from lows and it is currently at daily highs.
The consumer price index in New Zealand rose 0.4% between the first and the second quarter of the year. It is an unexpected slowdown in the inflation as the market was waiting for stable inflation of 0.5% in the Q2.
Year over year, prices in New Zealand rose 1.5% in the second quarter of 2018, less than the 1.6% inflation expected by the market but it is an acceleration from the first quarter: 1.1%.
According to Stats NZ, housing costs lead annual 1.5% inflation. “The largest contributor to inflation was higher prices for housing and household utilities, up 0.9 percent this quarter, and 3.1 percent in the year to June 2018.”
The New Zealand dollar dropped 0.32% following the release; however, the pair found support at 0.6755, and it bounced back to intra-day highs at 0.6790. The NZD/USD is currently trading 0.13% positive on Tuesday at 0.6785.
Forex technical conditions for the NZD/USD are pointing to the downside, at least in the big picture. Moving averages are leading to the south while momentum is weak.
To the upside, the pair needs a break above the 0.6800 to make bulls enter into the buying territory. Above that, the 0.6850 is the next resistance, followed by the 50-day moving average of 0.6900 level and the critical 0.7050.
To the downside, a close below the 0.6750 will open the doors to 0.6725. Below that, bulls will defend the 0.6690 area to avoid sell stop covering.
AUD/USD risk to turn south
The Australian Dollar is trading negative against the US Dollar on Tuesday after logging a flat day on Monday. The AUD/USD couldn’t extend its recovery from 0.7360, and it was capped by the 0.7450.
The pair closed flat on Monday; but on Tuesday, the AUD/USD were in wait-and-see mode as investors were waiting for news coming from the RBA minutes release.
Once the RBA was released, the AUD/USD accelerated its decline towards the 0.7400 area as the RBA board saw “no strong case” for a near-term move in interest rates. The bank agrees that “next rate move likely to be up if economy improves as expected.”
