A Clear RBNZ Keeps NZD/USD Trading Technically

July 21, 2016

“Dear RBNZ,

As Forex traders, we thank you for your open, clearly communicated dovish monetary policy path. Nobody here likes unpredictability.

Now all that’s left to do is cut rates on August the 11th.

Regards and remember that the trend is your friend,

Forex Traders”

That’s right, the RBNZ certainly isn’t messing markets around this time. Having clearly communicated their plans for an extra release to provide an update on economic conditions, delivering the dovish clarity expected and opening the door for the bank to cut rates below 2.00%.

This release comes on the back of plans to tighten restrictions on lending for home buyers and investors. (As we went through on Monday, investors will essentially need a 40% deposit to get their foot into the heavily overcooked housing market in the country’s major cities). The idea being this being that the RBNZ can now slash interest rates further to tackle low inflation without throwing more wood on the burning fire that is the housing market.

We saw what this did to NZD/USD on Monday and today’s price action has been very similar.

NZD/USD 4 Hour:
Click on chart to see a larger view.

Smooth, dovish communication by the RBNZ has seen NZD/USD step down nicely between S/R levels, retesting previous support as resistance as it drops.

Price has now hit the next obvious level for you to manage your risk around here. As always be wary of fighting momentum and trying to catch the falling knife. Support is only support if it holds!

Chart of the Day:
Lastly I wanted to revive the chart of the day section of the morning blog and take a look at Gold.

GOLD Weekly:
Click on chart to see a larger view.

The weekly shows the bounce that everyone’s been talking about with a key long term horizontal level thrown in to try and break through the short term noise.

GOLD Daily:
Click on chart to see a larger view.

The level lines up nicely with the most recent price action on the daily chart, acting as swing high resistance and being respected as support following the first breakout.

Bulls, be aware that price has rejected off weekly trend line resistance, but as always, I’m viewing this higher time frame line as highly subjective. A few charts I’ve seen around the place have all used different points to draw their trend line so view it as a zone rather than a hard level.

Footy Show that's gold. Chief!

“That’s Gold.”


On the Calendar Thursday:
GBP Retail Sales m/m
EUR Minimum Bid Rate

EUR ECB Press Conference
USD Philly Fed Manufacturing Index
USD Unemployment Claims

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Dane Williams – @VantageFX

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