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The week ahead: RBNZ expected to cut

FXStreet (Guatemala) - While the main theme has been a lead up to the Fed decision this month, the week ahead looks to be somewhat quieter and absent of US data events as we move in towards the FOMC showdown meeting in the following week. As noted by analysts at RBS, we have had all the worthwhile data in respect to the FOMC's economic monitoring requirements and a Fed lift-off is expected now on the 16th Dec. Whether this will necessarily be a lasting bullish effect for the US dollar is debatable.

The major event that took place last week was the ECB not delivering what Draghi had been inciting and the subsequent volatility in a wrong footed market-place. The euro rallied the furthest in six years by 4% on the day in a short squeeze to make one and a half month highs just shy of the 1.10 handle. This week might be one where the sidelines get filled rather than exiting more shorts although further upside cannot be written off as Valeria Bednarik, chief analyst at FXStreet suggested when she explained, "The fact that the greenback was unable to gain on a good Payroll, suggest pair may continue rallying this week. In the 4 hours chart, the pair is well above its moving averages, while the technical indicators have resumed their advances near overbought readings after a limited corrective move, supporting and advance towards the 1.1000 figure, with a break above it supporting an upward continuation towards the 1.1120 level. "

RBNZ expected cut: priced in?

It now turns to other Central Banks this week with the RBNZ, BoE and SNB all up ahead. The SNB may wish to hold off against the backdrop of a less dovish ECB and so to is the BoE expected to remain on hold although the minutes will be scrutinised for any change of outlook or clues as to when a rate hike might arrive, The RBNZ on the other hand is expected to cut its rate 25bp for fourth for the year, especially on the back of the OPEC outcome and likely depreciation in oil prices. There could be a trade in there should the RBNZ cut rates and offer a dovish outlook ahead. China trade data shall be closely monitored and Japan’s second reading of Q3 GDP to see whether Japan indeed entered a technical recession.

NZD/USD levels

NZD/USD targets are now set on the Nov highs of 0.6790 although failures on the 0.67 handle taken last week could be a setup for a run on stops below and a bearish recovery back through the 100 SMA on the hourly sticks. Supports to the downside come as 0.6711 (1hr 20 SMA), 0.6662 (1hr 100 SMA), 0.6611 (1hr 200 SMA), 0.6591, 0.6558 and 0.6426 Nov low.

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