NZD/USD: consolidates minor recovery, capped 0.7120

NZD/USD is consolidating the daily recovery and neutral in a sideways phase around the 0.71 handle. 

The US dollar has been firm on the back of expectations for a rate hike before the year is out from the Fed. However, Yellen's rhetoric was more dovish on Friday and left the greenback somewhat more mixed to close last week's final session on Wall Street.

Data wise, US retail sales rose 0.6% in September (matching expectations), although the core control group rose only 0.1% (vs 0.4% expected), explained analysts at Westpac, adding, "The data was disappointing to the Atlanta Fed’s model of Q3 GDP which cut its estimate from 2.1% to 1.9%. PPI rose 0.2% in September (vs 0.3% expected), for a yoy rate of 0.7%. Gains were seen in energy and food. Consumer sentiment (Univ. Michigan) fell from 91.2 to 87.8 (vs 91.8 expected)." For the week ahead, Fed speakers and the last Presidential debate while markets are predicting a Clinton victory that has been supporting the greenback recently. 

The analysts at Westpac offered a one to three month outlook a follows: "Targets 0.6950 or lower as long as the RBNZ cuts to 1.75% in November and the Fed tightens to 0.625% in December, as we expect. (13 Oct)."

NZD/USD levels

NZD/USD is failing to recover from the lows of 0.7034 having met recent highs of 0.7132. The bears have been in charge since the break of the 0.7220/40 previous support area earlier this month in an extension of the supply from the daily highs of 0.7482. Meanwhile, the pair still holds above the 200 daily sma at 0.7022 around the supporting 2016 trend line. 

 

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