The primary outsider today is not the Russian ruble, however the New Zealand dollar, which not just collapsed to a two-year low, but continues to show bearish characteristics. The August meeting of the Reserve Bank of New Zealand was fatal for the nationwide currency, and now
, the currency set NZD/ USD, obviously, will inhabit a brand-new rate niche.The regulator has actually exceeded even the” softest”expectations of experts. The head of the RBNZ Adrian Orr, who was just recently selected to his post, stated that the Central Bank chose to extend the forecast for preserving the present rate. If the timeframe for possible tightening up of monetary policy was previously at the level of 2019, then this issue will not be considered until 2020. Moreover, according to Orr, the regulator does not exclude the alternative of decreasing the rates of interest level,” if it is needed”. Here, it deserves recalling that a few months earlier, the RBNZ took a more definitive position. And although the regulator did not reject that the financial policy parameters will not change in the foreseeable future, the Reserve bank firmly insisted that the next step would be a rate hike rather than a reduction. Given this position, the marketplace was oriented to the 2nd half of 2019(October-December)and did not anticipate any surprises from the regulator earlier than the due date. However the New Zealand Reserve bank still amazed, it would appear, the “through “session became a genuine test for the traders of the currency set NZD/ USD.The rhetoric of Adrian Orr helped the pair of bears to break through a strong support level of 0.6750, from 2016, the rate has actually repeatedly approached this target, however each time it was warded off, thus forming a”bottom”. It is notable that after the impulse decline, the price retracement did not follow, as is often the case in such cases(for example, the ruble,
in pairing with the dollar, still aims to restore a minimum of some of the lost positions). This suggests that the market has not totally played the news motorist, and after a minimal correction, the decline will continue.The reality is that the New Zealand dollar at the moment does not have any reasons for its own growth. In tandem with the US dollar, it can reveal a restorative development only due to the weakening of the greenback. But, firstly, the United States dollar is now in fantastic shape, and, secondly, the impact of the August meeting will be felt for a very long time. Reserve Bank of New Zealand laid out an extremely cynical image. According to the head of the RBNZ, the prospects for the country’s economy remain weak. This thesis is consistent with the opinion of the New Zealand Minister of Finance, who recently announced that the main projection of GDP growth for the present year will be revised down( from the existing 2.8%). The slowdown in economic growth is not the only problem. According to the latest data, the level of service self-confidence, in addition to consumer confidence, has substantially decreased in the nation. The property market has cooled down, the sector of production and, what is specifically important for the island state, the service sector, reveals a negative characteristics. Foreign trade is also not encouraging. In June, the trade balance deficit was unexpectedly fixed, with the general expectations of a surplus.Separately, it is necessary to tell about inflationary characteristics. Consumer costs in New Zealand increased by 1.5% in the second quarter of this year, continuing to grow after development of 1.1%y/ y in the first quarter. First, most experts anticipated more substantial development, and secondly, relative to the previous quarter, the CPI slowed in April-June to 0.4%( 0.5%in January-March). Furthermore, regardless of the previously mentioned boost in inflation, prices for dairy items(which are so crucial for the New Zealand economy )continue to decrease. The results of GDT auctions reveal that costs for practically all stock dairy products are falling, the weighted average rate of the auction reduced by $86 with a stable supply growth. Because the beginning of June, the price index for dairy items has remained in the unfavorable location, and following the results of the last auction (which happened this Tuesday) was able to rise just to zero level. The offer, as in the past, significantly goes beyond the need in the dairy market, and this truth has a negative influence on the general situation in this area. In addition, the decline of the yuan has created an additional difficulty for Chinese importers, minimizing their activity. By the method, RBNZ explained in a different line that the threats for the nation’s export sector are growing in percentage to the growth of global trade tension. The hint of the US-China trade war is more than obvious.Thus, the New Zealand regulator made it clear that over the next two years, it is not going to tighten financial policy and if there are modifications in the existing specifications, then towards reducing. This position will apply pressure on the currency pair NZD/ USD for a long time, particularly if the trade war in between China and the US once again will continue. From the technical perspective, the circumstance is as
follows. On all timeframes, the currency pair NZD/ USD is on the bottom line of the Bollinger Bands indicator under all lines of the indication Ichimoku Kinko Hyo, which formed a strong bearish signal “Line Parade “. This shows the clear advantage of the southern movement. Bearish momentum is so strong that it is prematurely to discuss price correction.
Just if tomorrow’s data on the growth of American inflation go much even worse than expected, the bulls of the set can expect a very little price retracement. Otherwise, the top priority will remain for the south. The main objective of the southern movement is at the lows of 2016, that is, at the base of the 65th figure. It is the mark of 0.6500 that will end up being the main barrier for bears NZD/ USD.The product has been offered by InstaForex Business-www.instaforex.com