NZD/USD: trading the interventions
By Kira Iukhtenko, FBS
NZD/USD fell into the $0.7700 area on Monday after data showed the Reserve Bank of New Zealand (RBNZ) confirmed in their FX transaction report that they did really intervene into the market in August. Data showed the regulator sold 521 million NZ$ in the previous month in order to lower the exchange rate of the kiwi dollar.
The pair found some support around $0.7705 and jumped into the $0.7820 area on Tuesday. However, in the current conditions the medium-term scenario still looks rather bearish. The case for further RBNZ interventions remains very high. We all know that the NZ economic growth is one of the strongest in the developed world, but the expensive currency is a threat for the commodity-exporting country. Last week the NZ Prime minister said that the fair value of the currency is around $0.6500 – we are still very far from here!
From the technical viewpoint, the pair is strongly oversold these days. We are ready to sell the rallies into the $0.7850 area with a target of $0.7690. These are the 2013 lows.
Later in the week don’t miss the latest Global Dairy Trade auction results on Wednesday morning. A rapid decline in prices of milk and dairy products is a high concern for the economy these days. By the end of the week focus will switch to the US labor market data.
Chart. Weekly NZD/USD