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James Hyerczyk
New Zealand Kiwi

The New Zealand Dollar retreated on Wednesday as global risk aversion rose again after the 2-year/10-year U.S. Treasury yield curve inverted briefly, signaling a looming recession. The U.S. Treasury yield curve inverted for the first time since June 2007, with yields on the U.S. 2-year notes rising above those on the 10-year note.

At 22:48 GMT, the NZD/USD is trading .6441, up 0.0007 or +0.11%.

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Some analysts are saying that the potential recession signal from the inverted yield may be distorted by global quantitative easing, however, the self-fulfilling nature of economic cycles is a worry.

Later today, investors will get the opportunity react to news from Australia. Traders will be looking for monetary policy clues in a speech by Reserve Bank of Australia Assistant Governor Guy Debelle on “Risks to the Outlook” at the annual Risk Australia conference in Sydney. Traders also want to see if the consecutive rate cuts by the RBA have had any impact on the Australian labor market.


Daily Technical Analysis

The main trend is down according to the daily swing chart. However, the market has been trading mostly sideways since posting a volatile down move on August 7. A trade through .6378 will signal a resumption of the downtrend after five sessions of muted trading. The nearest main top is .6791.

The minor trend is also down. A trade through .6588 will change the minor trend to up. This will also shift momentum to the upside.

The short-term range is .6791 to .6378. Its retracement zone at .6585 to .6633 is the nearest upside target.

Providing resistance is the May 23 bottom at .6481.


Daily Technical Forecast

Based on the recent price action and Wednesday’s close at .6434, the direction of the NZD/USD today is likely to be determined by trader reaction to the downtrending Gann angle at .6411.

Bullish Scenario

A sustained move over .6411 will indicate the presence of buyers. If this generates enough upside momentum, then we could see a drive into the former bottom at .6481 and a minor high at .6499. This level is a potential trigger point for a surge into the minor top at .6588, followed closely by the short-term 50% level at .6585.

Bearish Scenario

A sustained move under .6411 will signal the presence of sellers. This could lead to a retest of last week’s low at .6378, followed by the January 20, 2016 main bottom at .6346.

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