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Forex: NZD/USD recovery subject to RBNZ, Fed

The recent fall in the New Zealand Dollar vs the Greenback has had two main drivers behind. Firstly, the perception that the RBNZ may be shifting its focus toward a more interventionist role to avoid the appreciation of the currency. Secondly, the FOMC minutes induced-rally, which saw the US Dollar gain across the board on Wednesday.

While it is often said that following other's advise when trading may not be the best idea, as overtime can cause more harm than good on one's discipline to stick to his/her own plan, it is interesting to note, from a fundamental perspective, how there is significant consensus as far as FXstreet.com contibutor's views go, that an RBNZ intervention is hardly viable.

See below a couple of examples:

RBNZ intervention is fruitless - Nomura

The RBNZ will not intervene - TDS

So the question that follows is, since recent Kiwi selling has been mostly fueled by fears of RBNZ intervention, will the market also come to the conclusion that chances are very low, thus reinstating longs into what is still a mid-long term bull market. Even if that was the case, which would strengthen the case for the upside bias to resume, the market may still need renewed dovish evidence from the Fed's commitment to continue it open-ended QE after last Wednesday's minutes.

A more Kiwi-negative, valid point of view comes from RBS FX strategist Greg Gibbs, who said earlier this week: "The RBNZ is much less likely to hike rates while the NZD remains "over-valued", so the market should now start to unwind that 30bp of hikes it has recently priced into the rates curve."

Commodity Brief: Gold diverges to the upside

Oil was Thursday one of the big losers among commodities as it closed in NY around the $93 mark, losing almost -2% for the day, along with CRB index that lost -1.17% by NY close, printing fresh 2013 lows, despite the fact Gold managed to close in the positive. As GlobalFX CEO and former Head of Currency Strategy at the NAB and Westpac Gregory McKenna notes, Gold “took a bid tone from the equity sell off. If this is the new market meme for a while then Gold's weakness should be over for a little while and if it can break back into the recent down trend it has the potential for a substantial rally,” the analyst suggests.
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