A Q1 CPI slightly up 0,4% against previous 0,1% is the data released during the night which is influencing the actual NZD price action and show a soft positive situation for New Zealand bringing confidence between investors. Even the RBNZ have positively seen these data keeping the market to consider the OCR cut from 2% to 1,75% during the Aprile/June period from a 50% to 28% today.
However the New Zealand currency’s price action doesn’t seem to reflect the euphoria of the market: in the opening of the London session the NZD/USD moved to the downside and is currently suffering from the Oil volatility which is pushing the Kiwi to the red. Even if the gap is almost healed, the cross is currently trading at 0,6912, down 0,15% and it seems to have difficulties to regain the positive side of the chart after the Oil sell-off which is cutting down the market risk sentiment.
WTI and Brent are trading at the time of writing respectively at $38,55bbl and $41,17bbl (-4,74% and -3,92%) after having experienced an heavy downside gap at the opening session related to the missing agreement by the oil producers for the freezing of the production in Doha this Sunday.
It is interesting to see the AUD/NZD cross which is currently trading at 1,1088 down 0,65%: the Oil weaknesses is weighing more on the Australian currency which, after a decent opening gap, have done a 100pip more spike before trading at these levels.
The economic calendar for the New Zealand currency is full of events: tomorrow we will have the GDT Dairy Auction and Thursday it will be the turn for the consumer confidence and the credit card spending.
Analyzing the possible movements of the NZD during the next months i can estimate a possible price action:
NZD/USD: the cross is seen to the downside during the next months, in relation to a combination of lower OCR and better US economic data. Last weeks have seen a US Dollar under pressure after the skepticism of the Fed tightening process by the investors which are now pushing the Dollar to the downside. This sentiment is going to fade away during the next months, bringing up the USD.
Next intraday levels would be 0,6950 to the upper side, while the next significant support would be positioned at 0,6854.
AUD/NZD: the medium-term prediction for this cross is corroborated by the RBNZ willingness to cut the OCR while this move is currently excluded by the RBA. On the other side the Australian M&A activity is going to push up the AUD and in that case the cross would move up. We’ve to consider that this particular cross remains strongly correlated to the Black Gold price action and the Chinese economy performance.