Unemployment in New Zealand dropped to 3.4% during the third quarter, compared to 4% in Q2, making easier for the country's central bank (RBNZ) to continue down its tightening path.
The RBNZ is at the forefront of monetary policy normalization, as it has already concluded its asset purchase program and last month it increased interest rates by 25 bps (to 0.5%) for the first time in seven years, with its next meeting approaching on November 24th.
Today however, the spotlight will fall on the US Federal Reserve policy decision, as we wait to see if it will announce start date and pace of its Quantitative Easing tapering – the outcome of which can determine the next leg of the pair's move.
Looking at the technical landscape, the NZD remains at the driver's seat as it stayed above the important 0.7080-5 support (EMA200 and 38.2 Fibonacci of the September Low/October high rise) during yesterday's plunge and stages a rebound today, with the help of the aforementioned employment data.
This can result in further gains above mid-0.7100s, but it does not seem yet ready to challenge last month's highs and the 0.7219-42 area, unless an external factor propels it (a dovish Fed and/or Oil rebound could help).
Although it rises today, NZD/USD is negative on the week and in danger of retesting the EMA200, which would bring the 200 days EMA in the spotlight (at around 0.7030), but daily close below it, would be required to quash the pair's upward aspirations.
Past Performance: Past Performance is not an indicator of future results.
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.