Dovish RBNZ's reaction to the economy....
After a brief but fillip, NZDUSD enjoyed a small ride up on a better than expected jobs report after bouncing off a 10 month low on April 28 and rising expectations for lowering the inflation rate. According to statistics, unemployment fell from 5.2% to 4.9% end on March 31 which is better than 5.1% of economists expected. Near term inflation reports show that numbers are inching closer to the RBNZ's target mid point of 2% according to surveys. Quarterly readings from business managers show that inflation is expected to be on average at around 1.92% over the coming year and an expected 1.56% in the first quarter survey. The RBNZ reacted very positively to these numbers but putting the whole puzzle together to remove the highly accommodative stance of the RBNZ which will ultimately keep this currency pair down. CPI recently beat expectations but is expected to return a comfortable level and due to the amount of economic uncertainties, economists believe that this consolidated and accomdative view will be upheld for a bit of time. From a price action intraday standpoint, this pair took a bearish turn due to the missed expectations for the RBNZ to raise rates showing a dovish attitude. A lower parallel of the descending pitchfork was upheld as a strong support as now price is currently correcting in a rising wedge. I do expect the price to complete the rising wedge to the apex and maybe overshoot it a bit as bearish pressure is weakening and bull divergence is clear. Look for an entry on an exhausted overshoot if bears get squeezed from overrun stops but it may just turn out of this rising correctional wedge which would also be a strong bear entry.
Thank you for the support and constructive criticism is definitely welcome.
Trade with Care!
Thank you for the support and constructive criticism is definitely welcome.
Trade with Care!
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