Kiwi Plunged Amid Rising RBNZ Rate Cut Bets

Fundamental Analysis

* Kiwi Tumble: The New Zealand dollar remains under pressure due to increasing expectations of an imminent rate cut by the Reserve Bank of New Zealand (RBNZ). This sentiment has been driven by a softer Consumer Price Index (CPI) inflation for New Zealand in the second quarter (Q2), which has led to heightened bets that the RBNZ will lower interest rates sooner than previously anticipated. The CPI inflation fell to 0.4% quarter-over-quarter (QoQ) in Q2 from 0.6% in Q1, while the annualized CPI inflation decreased to 3.3% year-over-year (YoY) from the previous period’s 4.0%. Additionally, unexpected rate cuts by the People’s Bank of China (PBoC) on Monday have further pressured the New Zealand Dollar (NZD), given that China is New Zealand’s largest trade partner. The PBoC reduced both the one-year and five-year Loan Prime Rates (LPR), which serve as benchmarks for bank loans, by 10 basis points (bps).

Technical Analysis

* Technical Breakout: NZDUSD was traded lower following prior breakout below the previous support level 0.59850. MACD which illustrate bearish momentum signal suggest the pair to further extend its losses

* Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards 0.58750. Conversely, a potential reversal is also to be expected and the price could head towards 0.60900 after it breach back above the level 0.59850.

Understand how technical analysis can help you in this trading opportunity.

Potential Risks

Following a lack of significant data releases on Tuesday, investors are now focusing on upcoming U.S. economic data. Key reports to watch include Wednesday’s Manufacturing PMI and Service PMI, as well as GDP and the PCE Price Index.

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Monitoring

Stay updated on US and New Zealand data, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.