NZDUSD Forecast: China hurts commodity-based currencies
Chinese Data released last night does not meet the expectations:
China’s industrial production growth slowed considerably in November – increasing by 5.4% yoy (compared with 5.9% in October).”
China’s nominal fixed asset investment grew a little more slowly in November.
China’s retail sales growth edged marginally higher in November – to 5.8% yoy (from 5.6% in October), a historically weak result
The slowdown on the Chinese Economy hurt commodity-based currencies and commodity exporter countries. New Zeland and Australia are at the top of the list.
RBNZ pointed out that it will keep the interest rates at low levels for a reasonable period until it reaches the target of permanent employment and inflation.
On the other hand, there is FED and USD, which is expected to raise interest rates in December by over 70% possibility and is expected to put interest rates between 2.25% and 2.50%.
Looking at the matter technically;
After yesterday’s brief pause, the pair came under some renewed selling pressure and tumbled to sub-0.6800 level, or over two-week lows in the last hour.
Technical indicators on hourly charts are already pointing to oversold conditions and thus, warrant some near-term consolidation/minor pull-back.
On the weekly chart, Kiwi was unable to break above EMA 100 resistance. An inverted hammer candle indicates a strong bearish reversal.
The head and shoulders pattern started to work again. Daily closings below 0.68000 would trigger the bearish move.
The Targets will be:
0.6750
0.6670
0.6590
0.6550
0.6440
0.6340
and the target of the formation 0.62200
Note: Daily Closings above 0.69800 would invalidate the pattern.
China’s industrial production growth slowed considerably in November – increasing by 5.4% yoy (compared with 5.9% in October).”
China’s nominal fixed asset investment grew a little more slowly in November.
China’s retail sales growth edged marginally higher in November – to 5.8% yoy (from 5.6% in October), a historically weak result
The slowdown on the Chinese Economy hurt commodity-based currencies and commodity exporter countries. New Zeland and Australia are at the top of the list.
RBNZ pointed out that it will keep the interest rates at low levels for a reasonable period until it reaches the target of permanent employment and inflation.
On the other hand, there is FED and USD, which is expected to raise interest rates in December by over 70% possibility and is expected to put interest rates between 2.25% and 2.50%.
Looking at the matter technically;
After yesterday’s brief pause, the pair came under some renewed selling pressure and tumbled to sub-0.6800 level, or over two-week lows in the last hour.
Technical indicators on hourly charts are already pointing to oversold conditions and thus, warrant some near-term consolidation/minor pull-back.
On the weekly chart, Kiwi was unable to break above EMA 100 resistance. An inverted hammer candle indicates a strong bearish reversal.
The head and shoulders pattern started to work again. Daily closings below 0.68000 would trigger the bearish move.
The Targets will be:
0.6750
0.6670
0.6590
0.6550
0.6440
0.6340
and the target of the formation 0.62200
Note: Daily Closings above 0.69800 would invalidate the pattern.
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On the other hand, FED lifted rates as expected by 0.25%, with the dot-plot now pre-announcing two probable rate hikes for next year, down from three previously. The accompanying statement was hawkish as the Committee judged that risks to the economic outlook are roughly balanced, vs. the “appear to be balanced,” from the previous statement.
In our previous forecast, our first target was 0.67500 and the pair is trading at 0.67270 as of writing.
As seen on the chart, the pair broke the triangle and pullbacks towards 0.67500 can be used as selling opportunities. Daily closings above 0.68200 would invalidate the pattern.