Dollar Kiwi traded sharply lower today again, extending losses yesterday. The instigator seems to be weaker than expected trade balance (August), which came to a deficit NZD 1.1 billion vs. an expected 722 million gap. This 469 million missed is certainly a strong bearish number, since there were only 4 other month since January 07 when the wait was more than in the Miss August However, it should be noted that this is actually an improvement (in terms of expectations) prodigious 756m Miss July, which ranks number one in terms of lack since 07 elsewhere. In addition, the market has overestimated the Trade Balance figures for the modest sum of 56% of the time since 07, suggesting that the market should be used to seeing in expectation, and therefore reduce the downward impact this time. Perhaps the best evidence against a strong bearish sentiment resulting from this last impression can be seen from the price action when the latest happened. Interestingly, NZD / USD actually traded HIGHER by the end of the day after a weaker trade balance print in recent history (in terms of absolute deficit gap and the failed standby), suggesting there must be something more that is actually driving NZD / USD down today.
looking at the share price yesterday, it feels as if it's technicals that is driving prices now. After confirming the rupture of 0834, the additional downward pressure drove prices down beyond the bottom 0.8315 swing low in Asian trading, resulting in a still bearish acceleration that managed to violate at 0.83 the US session. It is likely that technical bear essentially took advantage of the negative trade balance to send the price to 0.824 to 0.825 resistance turned support. That decline stalled today around the next area of immediate support is a good sign that he is in effect claiming technicals shots now.
Time Table
in mind, we can continue to expect short-term additional technical interference. Prices should bounce higher, but any corrective rally from here will likely be approved by the top of the wedge narrowing and the confluence with the soft support of 0.8265 to 0.827. If 0.824- 0.825 is broken, prices may very likely find support at the lower end of the consolidation was found Sept. 18 echoes stochastic indicator which is close to the oversold region and will most likely be in the oversold zone should strike prices near 0.82.
Weekly Chart
the case for a bearish downturn is also strong in the weekly chart. Stochastic is overbought readings with the tapered curve Stoch lower, while the current decline affirms the 0.85 ceiling and open the Top Channel below a reasonable withdrawal target price should close around where we are this week.
Basically Kiwi dollar should appreciate because of the intention of RBNZ to raise rates in 2014. However, we find it difficult to see the clean upward direction in NZD / USD USD also has one the most optimistic cycles since the beginning of the financial crisis. As such, we continue to see technicals tell the difference as traders think about which driver is most important in the long term. The consequence of this is that prices can only remain in the 0.81 / 0.85 Top Channel, similar to what we have seen between June and August 2013.
Links:
GBP / USD - continues to count on the support at 1.60
AUD / USD - Drifts in One week Low below 0.94
EUR / USD - continues Drift slowly lower below 1.35
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