Global macro overview for 10/08/2018

NZD/USD is the lowest since March 2016 after the RBNZ yesterday gave a clear justification for such a reaction. We were given a downward revision of the growth forecast, a reduced path for the OCR rate (forecast for an increase postponed by half a year for the third quarter of 2020), and the scenario in the case of materialization of negative risks now assumes a reduction of 50 bp and by 100 bp. In other words, the bank sees that the economy is slightly worse, which binds its hands for longer, and if it will be worse, it will be necessary to do more in the direction of loosening. And in the face of global trade tensions, the bar for negative revision of growth prospects is not suspended high. President Orr’s subsequent press conference was more balanced (bilateral risks to growth), although highlighting the awareness of threats. In general, in the pigeon housekeeping of the main central banks, the RBNZ is explicitly sent to the first camp. This will be important in the following months, when the volatility will come alive, the market will forget about trade wars and focus on foundations.

The pressure on NZD will remain, as there is currently no reason to expect a hawkish change in the attitude of the RBNZ. In addition, on the market devoid of emotions in recent days, investors have finally received a «juicy» piece and will not easily give it away.

Let’s now take a look at the NZD/USD technical picture at the H4 time frame. The market has broken below the technical support at the level of 0.6684 and currently is trading almost 100 pips lower, around the level of 0.6589. The local low was made at the level of 0.6580 in oversold market conditions. The momentum remains below its fifty level and still points to the north. The next important technical support is seen at the weekly time frame at the level of 0.6562.

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