It's been very quiet in Asian trade, with the Aussie, New Zealand dollar and the Chinese yuan barely showing a pulse. We could see some movement during the day, with RBA Governor Lowe delivering a speech and New Zealand releasing trade balance and GDP.
AUD/USD is almost unchanged in Tuesday trade. In the Asian session, the pair is trading at 0.6776, up 0.04% on the day. With no major U.S. or Australian events on the schedule, it’s likely to be another calm day for the Aussie.
The RBA had a busy summer, as the bank implemented back-to-back rate cuts in June and July? Analysts expect that there’s more to come, and soon. The markets have priced in a 80% likelihood of a rate cut at the October meeting. RBA Philip Lowe delivers a speech later on Tuesday, and the Aussie could lose ground if Lowe provides any hints about an imminent rate cut.
AUD/USD is drifting on Tuesday, as the pair is showing little inclination to test any barriers. The line of 0.6805, which remained relevant last week, is currently an immediate resistance line. If the pair manages to punch past this line, it will still be in a resistance area, with the next resistance line just around the corner, at 0.6839. On the downside, the pair touched 0.6760 last week but failed to break through.
USD/CNY has ticked lower in Tuesday trade. In the Asian session, the pair is trading at 7.111, down 0.06%.
The dollar posted gains to start the week, but the upward movement has fizzled on Tuesday. It could be calm waters for the pair until Thursday, when the U.S. economy receives a report card, with the release of third estimate GDP for the second quarter. Analysts expect this release to confirm the second estimate of 2.0%. An unexpected GDP reading could shake up the Chinese currency.
The Chinese yuan tested resistance at 7.110 on Monday, but has crept back towards this line in Tuesday’s Asian session. I expect the pair to hover close to this line, which has proven to be a tough obstacle for the dollar to break, for the remainder of the Tuesday session. Above, there is major resistance at 7.1700. On the downside, there is support just below 7.600, at 7.0592.
NZD/USD is flat in Tuesday trade. In the Asian session, the pair is trading at 0.6266, down 0.01% on the day.
The markets are expecting the New Zealand central bank to maintain interest rates at its policy meeting on Wednesday. However, it was just a month ago that the bank shocked the markets and slashed rates from 1.50% to 1.00% – analysts had expected a smaller cut of 25 basis points. Investors will be keeping a close eye on the rate statement. A sober assessment of the NZ economy could send the kiwi, which hit 3-year lows last week, further south. Traders should also keep an eye on the trade balance, with the trade deficit expected to balloon to $NZD 1.19 billion. The previous trade deficit was 685 million, so a significant worsening in the trade deficit could weigh on the NZ currency.
NZD/USD pushed across resistance at 0.6280 on Monday and remains just above this line. It’s still too early to tell if the pair can consolidate above this line. Still, the NZ dollar touched a monthly low on September 20 of 0.6255 and has recovered some of last week’s losses. Below, there is support at 0.6240. On the upside, the next resistance line is 0.6360.
NZD/USD 4-Hour Chart
Kenny is an experienced market analyst, with a focus on fundamental analysis. Kenny has over 15 years of experience across a broad range of markets and assets –forex, indices and commodities.