Current trend

The New Zealand dollar is actively strengthening during morning trading, recovering from the previous day’s attempts at a corrective decline. It is testing 0.6150, while market participants are awaiting the speech of the US Fed Chairman Jerome Powell at the annual Economic Symposium in Jackson Hole, as before, hoping to receive clear signals in favor of lowering interest rates during the September meeting. However, the adjustment seems to have already been decided, and investors are only debating its possible size – whether it will be a standard quarter of a percentage point decrease or a half point at once. The probability of a –50 basis point reduction in borrowing costs by now is almost 40.0%, according to the Chicago Mercantile Exchange (CME) FedWatch Instrument.

Poor macroeconomic statistics are putting pressure on the New Zealand currency on Friday. Retail sales volumes for the second quarter fell by 1.2% after growing by 0.4% earlier, although analysts expected a correction of –1.0%. The indicator excluding the auto market changed by 1.0% compared to the upward dynamics of 0.3% in the previous period.

The American macroeconomic background also remains ambiguous. Yesterday, investors paid attention to the dynamics of business activity. The August manufacturing PMI fell from 49.6 points to 48.0 points, while the average analysts’ forecasts did not assume a correction of the indicator. The services PMI rose from 55.0 points to 55.2 points against preliminary estimates of a slowdown in the dynamics to 54.0 points. In turn, weekly data on the American labor market recorded an increase in initial jobless claims by 232.0K, which generally corresponded to analysts’ forecasts but was higher than the previous figure of 228.0K. The total claims reached 1.863K from 1.859K earlier, confirming the cooling of the sector, which is also a condition for reducing the cost of borrowing at the September meeting of the American regulator.

Support and resistance

On the daily chart, Bollinger bands are showing confident growth: the price range is narrowing but remains quite spacious for the current level of activity on the market. MACD maintains a strong buy signal above the signal line. Stochastic, having approached the high marks, is trying to turn into a downward plane, signaling in favor of the development of a corrective decline in the ultra-short term.

Resistance levels: 0.6153, 0.6177, 0.6200, 0.6221.

Support levels: 0.6130, 0.6100, 0.6085, 0.6068.

Trading tips

Long positions may be opened after a breakout of 0.6177, with the target at 0.6221. Stop loss – 0.6153. Implementation period: 2–3 days.

Short positions may be opened after a breakdown of 0.6130, with the target at 0.6068. Stop loss is 0.6160.