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| New Zealand Interest Rate Decision Posted: 07 Dec 2011 06:24 AM PST
Today at 20:00 GMT we will get the interest rate decision and press conference from the Reserve Bank of New Zealand. The RBNZ is expected to hold rates steady at 2.50% unlike the RBA which lowered Australian interest rates by 25 bp. Given the headwinds facing the global economy the RBNZ would most likely enjoy loosening monetary policy. However, because of higher inflation the RBNZ may keep interest rates on hold. Currently New Zealand inflation stands at 4.6% y/y. The RBNZ targets inflation between 1-3%. The NZD/USD should be supported in the near term if some of some sort of compromise comes from this week's EU economic summit. The 6-month trailing correlation between NZD/USD and EUR/USD stands at 0.80. A correlation closer to 1.00 means the currency pairs move in the same direction. This should help keep the NZD supported versus the USD and the NZD/USD has resistance at the top of the recent consolidation pattern at 0.7840 followed by 0.7980 off of the falling trend line from the August high. Support comes in at 0.7730. For those traders looking to avoid exposure to the EUR the AUD/NZD may offer just that as the pair has a 6-month trailing correlation of with the EUR/USD of -0.16. This indicates there is a weak relationship between the movement of the two currency pairs. The technical picture for the AUD/NZD shows a triangle consolidation pattern from the November 18th high and the November 25th low. The initial resistance from the pattern is 1.3210 followed by 1.3380 off of the trend line from the yearly high. Read more forex trading news on our forex blog. |
| USD Up Following German Rejection of Double Bailout Plan Posted: 07 Dec 2011 04:10 AM PST
The EUR has been unable to hold onto its gains following yesterday's Financial Times story indicating EU negotiations are taking place to keep the existing European bailout when the new fund takes effect in mid-2012. The drop in the value of the EUR/USD comes after a German response threw cold water on the possibility of the ESM and EFSF running simultaneously With both the ECB meeting and the EU economic summit only a day away the rumor mill is running at full speed. Yesterday evening the FT reported the EU is debating the possibility of keeping the current European bailout plan when the new ESM mechanism is expected to take over and this sparked an EUR rally into the NY close. This morning the story was denied by German officials and the EUR gave up those gains. The EUR/USD rose as high as 1.3450 before running into resistance at the 20-day moving average, a level the pair has failed to move above for the past week and a half. Support is seen back at the rising support line from the November low at 1.3350. Additional support may be found at 1.3260 from the November 30th low. Read more forex trading news on our forex blog. |
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