The rates continue within the uptrend in favor of the NZD. The reversal of the trend occurred in October, with rising expectations of the end of the trade conflict between China and the United States. This also contributed to an increase in commodity prices, which had a positive impact on commodity currencies.
The strengthening of the NZD was also possible thanks to an improvement in New Zealand's economic indicators and the monetary policy of the RBNZ. In particular, the regulator set softer than expected requirements for the capitalization of banks, which decreases the probability of a rapid reduction of the rate next year.
Of course, the continuation of the trend contributes to the weakening of the USD, which this week lost ground due to disappointing reports on business activity, as well as the weakest in six months growth in the number of jobs in the non-agricultural sector. The situation in the employment market in the United States remains in the spotlight today because we expect data on the unemployment rate and the average hourly wage.
Contradictory signals about the trade conflict between China and the US are not contributing to demand for risky assets, nevertheless, the market remains optimistic. However, if new reports from the US today are disappointing, there is reason to expect a further weakening of the dollar, ahead of the FED meeting next week. The deterioration of economic indicators will motivate the regulator to reduce the rate, especially given Donald Trump's calls to soften the monetary policy. In this situation, we believe that the most effective will be the deals to BUY, despite the probability of a price correction, given the signals of oscillators (MACD, Stochastic, RSI) that the rates are in the overbought zone. Nevertheless, most technical indicators confirm the efficiency of the deals on the trend in the short and long term.
