NZDUSD Sell-Off Continues
The recent short trade issued in NZDUSD has hit its final target at .6450. With USD having increased significantly in the last fortnight, amidst an uptick in hawkish Fed signalling, NZD and the broader risk complex has struggled to maintain demand. Indeed, Fed tightening is coming amidst a broader backdrop of risk off flows linked to ongoing uncertainty around the Russia-Ukraine conflict. With the violence ongoing, and with risks of further escalation, there are continued downside risks for the risk complex, including high-beta currencies such as NZD. With this in mind, bears can look to hold shorts while the pair holds below the former 2022 lows of .6450.
Keep an Eye On
Looking ahead, the key focus will be on the FOMC next week. With the Fed widely expected to lift rates by .5%, failure to do so would likely fuel a sharp correction in USD. However, should the Fed follow through and stick to hawkish guidance also (signalling further .5% hike to come), USD is likely to continue higher near term. Today, focus will be on US core PCE, which is a key inflation gauge used by the Fed. Following yesterday’s GDP miss, any undershoot today will likely weigh on USD into the Fed next week, while a beat should see renewed USD buying into the weekend.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.