The New Zealand dollar strengthened over all counter currencies in the FOREX markets in today;s trading session after the Reserve Bank of New Zealand raised interest rates by 0.25%. In a widely expected move, the RBNZ raised its benchmark interest rate to 3.25% from 3.00% and suggested that borrowing costs could rise again this year. Commenting on the decision, RBNZ Governor Graeme Wheeler said “it is important that inflation expectations remain contained and that interest rates return to a more neutral level.”

 

U.S. retail sales data weakened the dollar on Thursday by reminding investors that recovery still battles headwinds and the timing of Federal Reserve interest-rate hikes still remains up in the air. The Commerce Department reported earlier that U.S. retail sales rose 0.3% in May, missing expectations for a 0.6% gain. However, retail sales for April were revised up to a 0.5% gain from a previously reported increase of 0.1%. Also Core retail sales, which exclude automobile sales, eased up 0.1% in May, disappointing forecasts for a 0.2% increase. Core sales in April were also revised up to 0.4% from a previously reported flat reading.

 

Core retail sales, which exclude automobile sales, eased up 0.1% in May, disappointing forecasts for a 0.2% increase. Core sales in April were revised up to 0.4% from a previously reported flat reading. This shows that there’s a lot of on-going tension on the U.S dollar which sent it weak against all major currencies during the U.S trading session.

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Fundamentally we are having a strong New Zealand dollar and weak U.S dollar. Technically intra-day bias remains bullish with 1 hour and 4 hours time frames synchronized with crosses of 21 and 55 EMA to the upside. MACD and SSRC (stochastic) oscillators are also supporting a bullish continuation on both time-frames as well so further rise to 0.87211 resistance (weekly r3) is expected.

 

 

 

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