The downtrend continues, but it's losing its intensity, given the significant weakening of the USD. The market has been quite optimistic over the past few months, so macroeconomic reports and monetary policy are becoming crucial again.
The RBNZ in 2019 actively eased monetary policy and most likely, we are waiting for another rate cut this year. This month, the NZD has been supported by reports of progress in the trade talks between China and the US, but weak macroeconomic reports and a slowdown in the Chinese economy constrain the NZD and do not allow it to strengthen due to optimism on the market. The latest macroeconomic reports were mixed: the trade deficit grew in monthly terms more than expected, but the growth of exports in September by 5.1% amid a 2.1% decrease in imports shows a positive dynamics in the economy of New Zealand.
Macroeconomic reports on the US economy were also disappointing. In particular, there was a decrease in sales in the secondary housing market by 2.2% in September, although a month earlier, sales were growing. Therefore, the USD also lacks incentives to strengthen.
We believe that the downtrend will continue, given the rates in the overbought zone, according to the Stochastic oscillator. In addition, there is every reason to expect a weakening of the NZD next week, given the publication of data on business activity in China, where the economy is slowing. The USD will be able to get support with the publication of data on GDP in the third quarter and the unemployment rate. Therefore, the deals to SELL can be considered as the most optimal at the moment.
