The commodity dollars had a tough day on the charts. The Kiwi, Aussie and Loonie all gave up ground to the U.S. dollar today. NZD/USD fell through support at .8650, trading at its lowest levels in 6 weeks while AUD/USD has erased most of its gains from Wednesday. The currency pair is now hovering just above the .9400 handle again. As for USD/CAD, the bulls have pushed it beyond resistance on the falling trend line. Currently, the currency pair is at 1.0750.
The Kiwi saw the most volatility today. For the most part, it was caused by the Reserve Bank of New Zealand’s (RBNZ) monetary policy statement. The official cash rate was upped by 25 basis points to 3.50%. However, the move had already been expected by the markets. What most traders did not see coming were the dovish remarks of RBNZ Governor Graeme Wheeler.
Basically, the central bank strongly expressed its intention of keeping interest rates steady after four increases since January at 3.50%. It warned that the current levels where the Kiwi is trading is “unjustified and unsustainable.” Wheeler then went on to say that the currency could fall significantly. Market players then took these words as a warning that the central bank may intervene to weaken the Kiwi should they feel that the currency is getting way too strong.
While most analysts argue that the RBNZ will not directly intervene in the markets, Wheelers words were enough to send the Kiwi lower.
There were no reports released from Australia or Canada which may lead some to believe that the Loonie and Aussie simply followed the Kiwi’s suit on the charts.
The forex calendar is still blank for reports from the two countries and only the ANZ Business Confidence report for New Zealand is due. The report has been steadily coming lower every month since February, hinting that confidence among citizens is deteriorating. A figure lower than June’s reading of 42.8 could send the Kiwi to spiral even lower in the charts.
To contact the reporter of the story: Jonathan Millet at email@example.com.