Wednesday's Asian session was calm, as the Chinese yuan and NZ and Australian dollars are steady. The RBA minutes were dovish, and New Zealand will release CPI for the third quarter.
AUD/USD is flat early in Tuesday trade. In the Asian session, the pair is trading at 0.6775, unchanged on the day.
RBA Open to Further Rate Cuts
The RBA minutes were decidedly dovish, as members hinted at further rate cuts. The bank noted that low rates may have overly inflated prices in the housing market and that it would carefully monitor the situation. The financial markets have priced in a rate cut in November at 59 percent, and the likelihood of another rate cut will make the Aussie less attractive to investors.
AUD/USD Technical Analysis
AUD/USD lost ground on Monday, but remains range-bound. The round number of 68.00 remains an immediate resistance line, but the pair is not showing much appetite to break above this line. Below, there is weak support at 0.6760. This line was tested on Monday. The next support level is at 0.6710. I do not expect the pair to show any sustained movement in either direction on Tuesday.
USD/CNY is trading sideways early in Tuesday trade. In the Asian session, the pair is trading at 7.0741, up 0.09% on the day.
Chinese CPI Jumps to 3.0%
Chinese CPI climbed 3.0% in August, compared to 2.8% a month earlier. This marked the highest inflation rate since November 2013. The catalyst for the rise was a sharp increase in pork prices, which pushed up prices by 11.2% in September. China was scheduled to release New Loans, but this has been postponed to Wednesday. The indicator is expected to rise to 1350 billion yen ($190 million) in September.
USD/CNY Technical Analysis
The yuan rally, which started last week, has stalled on Tuesday. On Monday, the pair tested a major support line at 7.0592, but has retraced upwards on Tuesday. I expect this support line to fall during the week. Below, we find support at 7.0400. On the upside, 7.1100 has strengthened as USD/CNY has shown sustained downward movement.
NZD/USD is showing limited movement on Tuesday. In the Asian session, the pair is trading at 0.6297, down 0.11% on the day.
Next – New Zealand CPI
Traders should keep an eye on CPI, which is released every quarter. The forecast for Q3, which stands at 0.6%, unchanged from the second quarter. An unexpected reading could trigger some volatility from NZD/USD.
NZD/USD Technical Analysis
NZD/USD remains range-bound, with the pair showing little movement on Tuesday. There is immediate support at 0.6280, which has remained throughout October. Below, we find support at 0.6230. On the upside, 0.6357 has remained intact in resistance since mid-September.