AUD/USD, NZD/USD, USD/CNY – Daily Forecast

RBA decision, Chinese PMI and the ANZ commodity prices effects on the three pairs
Kenny Fisher
Currencies
Currencies

AUD/USD

Investors continue to digest a spate of key releases this week, highlighted by the RBA decision to maintain rates at an even 1.00%. RBA Governor Philip Lowe said it was reasonable to expect rates to remain low for the near future, and some analysts are predicting more rate cuts before the end of the year. The prospect of lower rates makes the Australian currency less attractive to investors.

AUD/USD posted gains on Wednesday, as GDP for the second quarter recorded a strong gain of 0.5%, matching the forecast.

AUD/USD Technical Analysis

The Australian dollar continues to gain ground. In Thursday’s Asian session, the currency touched a high of 0.6825, its highest level since August 1. The upside trend is clearly evident, as the Aussie is enjoying some upward momentum.

AUDUSD 4-Hour Chart

On the upside, the pair has broken through resistance at 0.6805, which had held in resistance since the first week in January. There is resistance at 0.6865, followed by a major resistance line at 0.6988.

0.6686 is a major support level. This line has some breathing room, with the Aussie currently on an upswing.

USD/CNY

There was positive news out of the services sector, as the Caixin services PMI improved to 52.1, marking a three-month high, This points to slight expansion in the services sector, which continues to perform better than China’s manufacturing industry. Further weak manufacturing numbers, such as the official manufacturing PMI earlier this week, could sour investment sentiment towards the yuan.

USD/CNY Technical Analysis

After breaking below the 0.1400 line in late August, CNY/USD showed a clear downward trend earlier this week. In Thursday’s Asian session, the pair is slightly higher, but it’s too early to tell as yet if this is a clear upward trend.

USD/CNY 4-Hour Chart

USD/CNY has recovered the 0.1400 line, and there is immediate resistance at 0.1409. If the pair continues to head higher and breaches this line, the next target is 0.1430. This line was breached in early August when the trade war between China and the U.S. was at a fever pitch, and China devalued the yuan below the key 7.00-level.

Trade War Woes Weighing on Kiwi

ANZ Commodity Prices rebounded in September, with a modest gain of 0.3%. This follows two straight declines, indicative of weak global demand, which has hurt New Zealand’s critical export sector. This translated into a brutal summer for the kiwi, which fell 2.4% in July and lost another 3.7% in August. On Tuesday, NZD/USD touched a low of 0.6269, its lowest level since September 2015.

NZD/USD Technical Analysis

After a downward trend dating back to August, NZD/USD has reversed directions and headed higher. The pair is showing gains in Thursday’s Asian session and there is a clear upward trend which started on Wednesday.

NZDUSD 4-Hour Chart

On the upside, 0.6425 is an important resistance line. This line was providing support up until mid-August but switched to a resistance role as NZD/USD lost ground.

0.6250 is a major support level. Just a few weeks ago, the line appeared very strong,  and for good reason – it has held firm in support since September 2015. However, if the NZ dollar loses ground, this line will become vulnerable.

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