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Kiwifruit hardest hit in trade so far today

The decline is an extension of yesterday’s bearish race, with the dollar rampant across the board. For now, that mood keeps the NZD / USD on course as the pair drops to its lowest level in six weeks.

NZD / USD collapses to new six-week lows ahead of morning European trade

Today’s low is now touching 0.6925 and threatening to break through trendline support @ 0.6935. Below that, there isn’t much to stand against a further potential pullback to late September lows @ 0.6860.

As it stands, it’s hard to argue against dollar sentiment, with EUR / USD also missing key support levels and USD / JPY threatening a further breakout above 115, 00.

But the kiwi itself is not doing very well despite the anticipation of a more hawkish RBNZ at tomorrow’s policy meeting. A 25 basis point hike is practically expected at this point, but the central bank tends to surprise with a 50 basis point hike instead.

This poses upside risks for the kiwi after some difficulty with buying AUD / NZD after meeting key technical support for trading this week:

NZD / USD collapses to new six-week lows ahead of morning European trade

The pattern of the lower highs and lower lows is still intact, but we see some challenge for the technical narrative as price begins to work its way through to test the technical resistance seen at 1.0417 – one that helped define the latest downtrend.

I would be skeptical of any deep weakness in the kiwi on that day, at least until we get more clarity from the RBNZ tomorrow. So, keep an eye out for the key levels above.

The NZD / USD could be under further pressure due to the shape of the dollar, but the AUD / NZD could see its gains more limited until we come to the central bank decision tomorrow.

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