NZD/USD – Consolidation. NZD closed above 0.66-handle for a second
consecutive session overnight. The slightly less-bearish mood was due to
relief rebound in GDT auction prices. NZD was at 0.6601. Daily
momentum and stochastics are indicating a mild bullish bias. Next
resistance at 0.6620 (61.8% fibo of Jul high to Aug low), before 0.6655
(61.8% fibo) and 0.67 (50 DMA). Bias remains to lean against strength.
We reiterate our bearish bias for NZD on a combination of drivers CPI
inflation at 15-year lows with risk of staying low for longer on low oil
prices and weak dairy prices, prospect of dairy prices staying low for
longer (first rebound after 10 consecutive declines; now at 2009-lows
levels), benign wage inflation, declining ToT amid weakening demand.
We see the risk of another 25bps cut, possibly as soon as the next
meeting on 10 Sep (3 more RBNZ meetings till end of 2015 – Sep, Oct,