Forex Flash: NZD/USD uptrend hinges on stability above 0.8300 – Westpac

The RBNZ inflation expectations survey (Tuesday) will be the week’s highlight for markets. According to Global Strategist Sean Callow at Westpac, “We don’t expect a dramatic reversal of the 18-month decline in expectations just yet, indeed the last few CPI prints have been surprisingly low so this survey has downside risk.” The other important release is the Q4 terms of trade (Monday), which could surprise with a bounce based on lower import prices (currency effect). Migration (Wednesday), trade balance (Wed), building permits (Thursday) and business confidence (Thursday) complete a busy week.

Ultimately, “the 9 month long uptrend is at risk if 0.8300 below gives way. Global sentiment has soured during the past two days, and RBNZ Governor Wheeler talked the NZD moderately lower in a speech earlier this week. Should the Italian elections this weekend scare the bulls, the extreme long positioning in the NZD would be at risk of being pared. If 0.8300 holds, however, we will retain positive multi-month bias towards
0.8570 next.” writes Callow.