Daily Report: Kiwi Tumbles as RBNZ on Hold, Aussie Recovered on Suspicious Job Numbers

New Zealand dollar extends recent down trend after RBNZ kept the OCR unchanged at 3.50% as widely expected. Governor Graeme Wheeler indicated that ‘it is prudent to undertake a period of monitoring and assessment before considering further policy adjustment’. The RBNZ appeared deliberatively vague in communicate the timing of the next rate hike, noting that it expects ‘some further policy tightening will be necessary to keep future average inflation near the 2% target mid-point and ensure that the economic expansion can be sustained’. Overall, the policy statement appears more dovish than expected on reduced inflationary pressure. More in RBNZ Paused In Rate Hike, Probably Until Next Year.

NZD/USD reaches as low as 0.8179 so far after the release. The fall from 0.8835 is still in progress and there is no clear sign of bottoming yet even though oversold position is seen in daily RSI. Near term outlook will stay bearish as long as 0.8269 resistance holds. Current fall would target 61.8% retracement of 0.76682 to 0.8835 at 0.8122 and below. We’ll look for bottoming signal between 0.8051 support and 0.8122.

Australian dollar recovered stronger after data showed an unrealistic 121k growth in the job market in August. Economists noted that the unprecedented numbers were largely due to change in sampling and composition of the survey. The ABS started adjusting the definitions and changing samples in July 2014 and will continue through May 2015. Thus, there are possibilities of strange numbers in the upcoming releases. And looking through the noises, around 18.2k jobs were created only. Nonetheless, that’s still better than expectation of 15k. Unemployment rate dropped back to 6.1%, down from July’s 6.4% and same sa June’s 6.1%.

EUR/CHF recovered strongly overnight on reports of comments from SNB officials. An alternate member of SNB governing board, Thomas Moser, said that negative interest rates is always a “possibility” for the central bank. And he noted that SNB would use it “if needed”. There are speculations that, in response to ECB’s recent announcement, SNB could start adopting negative rates in the upcoming meeting on September 18. Nonetheless, most analysts believe that SNB would stay with intervention for the moment to defend the EUR/CHF 1.2 floor.

Elsewhere, UK RICS house price balance dropped to 40 in August. Japan BSI large industry index rose to 12.7 Q/Q in Q3. China CPI slowed more than expected to 2.0% yoy in August while PPI dropped -1.2% yoy. German CPI and ECB monthly bulletin will be featured in European session. Canada new housing price index and US jobless claims will be release in US session.

Daily Pivots: (S1) 0.9106; (P) 0.9162; (R1) 0.9211; More…

AUD/USD formed a temporary low at 0.9112 and intraday bias is turned neutral first. Some consolidation would be seen but near term outlook will stay bearish as long as 0.9401 resistance holds. As noted before, the pair could have completed a head and shoulder top pattern (ls: 0.9460, h: 0.9504, rs: 0.9401). Below 0.9112 will target 61.8% retracement of 0.8659 to 0.9504 at 0.8982 and below.

In the bigger picture, price actions from 1.1079 are viewed as a medium term correction. At this point, we’re still slightly favoring the case that such correction is completed at 0.8659 already, ahead of 50% retracement of 0.6008 to 1.1079 at 0.8544. However, such view is dampened by the fact that AUD/USD failed to sustain above 55 weeks EMA and was rejected from there. Further downside acceleration could extend the correction from 1.1079 through 0.8659 to 0.8544 fibonacci level and below.

AUD/USD 4 Hours Chart

AUD/USD Daily Chart

GMT
Ccy
Events
Actual
Consensus
Previous
Revised
21:00
NZD
RBNZ Rate Decision
3.50%
3.50%
3.50%

23:01
GBP
RICS House Price Balance Aug
40%
47%
49%

23:50
JPY
BSI Large All Industry Q/Q Q3
12.7
-10.3
-14.6

1:30
CNY
PPI Y/Y Aug
-1.20%
-1.10%
-0.90%

1:30
CNY
CPI Y/Y Aug
2.00%
2.20%
2.30%

1:30
AUD
Employment Change Aug
121.0K
15.0K
-0.3K
-4.1K
1:30
AUD
Unemployment Rate Aug
6.10%
6.30%
6.40%

6:00
EUR
German CPI M/M Aug F

0.00%
0.00%

6:00
EUR
German CPI Y/Y Aug F

0.80%
0.80%

8:00
EUR
ECB Monthly Bulletin

12:30
CAD
New Housing Price Index M/M Jul

0.20%
0.20%

12:30
USD
Initial Jobless Claims (SEP 6)

306K
302K

14:30
USD
Natural Gas Storage

79B

18:00
USD
Monthly Budget Statement Aug

-132.8B
-94.6B

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