New Zealand dollar bounces on Thursday
The New Zealand dollar has rallied during the day on Thursday, reaching towards a cluster of trading that had been important several sessions ago. However, this was in reaction to the CPI figures in the United States coming out just a bit lower than anticipated, but overall it looks as if the Federal Reserve is likely to continue to raise interest rates, so I think that we will continue to favor the downtrend. Ultimately, even though this was a significant bounce, in the end it was only about 70 pips.
The 0.70 level should be psychologically resistant, so I don’t have any interest in trying to buy this market. I think that we will go to the longer-term consolidation “floor” at the 0.68 handle. While it could be choppy, I still favor the downside as the Federal Reserve is going to raise interest rates while the Royal Bank of New Zealand looks very unlikely to raise rates anytime soon. This will be especially true if we start to get some type of trade war flareup between Asia and the United States, but at this point I think that is a very unlikely scenario. With the US dollar strengthening the way it has, I don’t think we’re going to turn around in the short term, and I anticipate a summer of greenback strength.