NZDUSD Nosedives as Sellers Gain Control23 April, 2015 by Aayush Jindal in Fundamental Analysis, Market Analysis, NZDUSD, Technical Analysis
- New Zealand dollar was crushed against the US dollar after a speech by the Reserve Bank of New Zealand’s Assistant Governor John McDermott.
- NZDUSD breached the 0.7600 support area to test the 0.7580 hurdle.
- US Manufacturing Purchasing Managers Index (PMI) will be released by the Markit Economics today, which is expected to post a minor decline to 55.5.
Assistant Governor John McDermott’s Speech
Earlier during the Asian session, there was an important event in New Zealand, as the Reserve Bank of New Zealand’s Assistant Governor John McDermott speech was scheduled. The mentioned event ignited a selling pressure on the New Zealand dollar, as John McDermott showed no signs of a rate hike in the near term. The NZDUSD pair fell sharply and traded below the 0.7600 support area.
Chinese HSBC Manufacturing PMI
There was one more critical event scheduled during the Asian session, as the Chinese HSBC Manufacturing Purchasing Managers Index (PMI), which is an early indicator of economic health in the Chinese manufacturing sector was released by the Markit Economics. The market was expecting it to stay at 49.6 in April 2015, compared to the preceding month. However, the outcome was on the lower side, as Chinese HSBC Manufacturing Purchasing Managers Index fell to 49.2.
Speaking on the release an Economist at Markit, Annabel Fiddes mentioned that “Operating conditions in China’s manufacturing sector deteriorated slightly for the second month running in April, with the flash reading of the PMI falling to a one-year low”.
The New Zealand dollar traded sharply lower earlier today, as the NZDUSD pair cleared an important support trend line on the 4-hour chart. After the break, the pair fell sharply and traded towards the 100 simple moving average, which is just around the 50% fib retracement level of the last leg from the 0.7420 low to 0.7740 high.
Let us see if the pair can manage to correct higher in the short term or not. A break below the 100 SMA (4H) might take NZDUSD towards 200 SMA (4H).
US Existing Home Sales
Later during the NY session, the US Manufacturing Purchasing Managers Index (PMI) will be released by the Markit Economics. The market is expecting the US Manufacturing PMI to decline from the last reading of 55.7 to 55.5 in April 2015. If the PMI decreases more than expected, the US dollar might come under pressure in the near term.