Chart of the Day NZDUSD

<h2><span>Chart of the Day NZDUSD</span></h2>
<p><strong>NZDUSD – Further corrective upside</strong></p>
<p><span>The rapid spread of COVID-19 around the world remains foremost on the mind for investors and with lockdowns around the world being extended, the economic impact is getting worse by the day. That said, on a more positive note, in some of the hotspots such as Italy, Spain and New York, the number of daily deaths is turning down. New Zealand’s PM Ardern is not yet willing to rule out an extension to New Zealand’s four week lockdown – which is harsh by global standards – but the exact “exit criteria” was being worked on.</span></p>
<p><span>The economic dataflow is starting to capture the impact of lockdowns to prevent the spread of COVID-19. US nonfarm payrolls plunged by 701k in Mar, sending the unemployment rate up by almost a full percentage point to 4.4%. This is just a taste of things to come, with the next monthly reading expected to be a lot worse, with Pantheon Macroeconomics picking a 14-17 million drop in payrolls, sending the unemployment rate up to 12-14%. As with other data released last week, the “miss” relative to expectations simply reflects timing factors, with the run of economic data we’ll be seeing over coming months as bad, if not worse, than that seen during the GFC.</span></p>
<p><span>The Reserve Bank of New Zealand announced that it would increase its pace of government bond purchases, targeting $1.8b in the week ahead, up from $1.35b last week and $0.75b in the first week of QE. This comes ahead of the syndicated tap of the 2031 bond this week. On Friday, both Governor Orr and Assistant Governor Hawkesby spoke to the media, signalling that the RBNZ is prepared to upsize and expand the scope of its QE programme. This news supported a rally in NZGBs, which saw yields down 6-9bps across the curve, outperforming the swaps market, with the 10-year swap rate unchanged at 0.93%. We think that the RBNZ will soon be looking to purchase LGFA bonds (and possibly Housing NZ) to help reduce spreads and the cost of borrowing for local governments. </span></p>
<p><img class="aligncenter size-full wp-image-41306" src="http://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.59.27.png" alt="" width="2060" height="1222" srcset="https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.59.27.png 2060w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.59.27-300×178.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.59.27-1024×607.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.59.27-768×456.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.59.27-1536×911.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.59.27-2048×1215.png 2048w" sizes="(max-width: 2060px) 100vw, 2060px" /></p>
<p><span>From a technical and trading perspective, the NZDUSD continues to consolidate in the upper end of the weekly reversal candle printed two weeks ago, while price continues to rotate above the pivotal .5750 probabilities favour the potential for another corrective leg higher to develop. A daily close above the near term VWAP at .5920 would certainly encourage bullish spirits setting sights firmly on the monthly pivot at .5969. A daily close above the monthly pivot would be very constructive opening a run to test offers and stops towards .6200 as the next upside objective</span></p>
<p><img class="aligncenter size-full wp-image-41307" src="http://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-09.02.53.png" alt="" width="2055" height="1217" srcset="https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-09.02.53.png 2055w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-09.02.53-300×178.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-09.02.53-1024×606.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-09.02.53-768×455.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-09.02.53-1536×910.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-09.02.53-2048×1213.png 2048w" sizes="(max-width: 2055px) 100vw, 2055px" /></p>
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<p>The post <a rel="nofollow" href="https://blog.tickmill.com/trading-strategies/chart-day-nzdusd-4/">Chart of the Day NZDUSD</a> appeared first on <a rel="nofollow" href="https://blog.tickmill.com">Tickmill</a>.</p>