10.09.201911:12 Forex Analysis & Reviews: Markets still believe in positive, NZD and AUD grow as part of the correction

Markets continue to adjust as risk appetite returns. Gold declines for the fourth day in a row while December futures returned below $ 1,500 an ounce. Oil prices are rising and this growth is largely due to positive expectations as a result of the meeting of the OPEC + monitoring committee on September 12.

However, the main positive still comes from the early resumption of trade negotiations between the two largest economies in the world. Both the United States and China have not yet received any dividends from the unfolding tariff war. The United States is confidently moving towards a recession, which is reflected in the stubborn reluctance of American corporations to return physical production to the United States, also in the rapid growth of the budget deficit and trade balance. In turn, China continues to smoothly slow down, managing to offset the negative effects of higher tariffs through incentive measures.

NZDUSD pair

The New Zealand dollar corrected higher amid growing interest in risk and obvious problems for the US dollar, but in the long run, its prospects look as weak as they did a week ago.

In the comments after the meeting in August, RBNZ noted that he is a supporter of negative rates if you choose between rates and QE. In subsequent interviews, the head of the RBNZ, he repeatedly confirmed this position, emphasizing that the RBNZ will move where the whole world is going, that is, in the direction of negative rates.

ANZ believes that by mid-2020 the rate will be reduced three more times and will reach the level of 0.25%. In addition, it does not exclude that the rate will go even lower than zero.

They also believe that it will cause serious structural damage to the economy in the long run even if negative rates stimulate economic activity.

While kiwi is supported by a general change in the mood of the markets that are waiting for the previously announced resumption of trade negotiations between the US and China. Markets are inclined to believe that China is forced to somewhat soften its position due to a significant weakening of growth rates, in particular, a drop in producer prices to a three-year low, which may also precede a reduction in business activity.

Kiwi can still gain a little strength. Test the zone of 0.6468/88 and even try to get to 0.6529, but corrective growth only makes it possible to sell from more favorable levels and does not indicate a long-term reversal. Strategically, NZD is still directed downward and therefore, sales on growth attempts are more logical.

This result indicates that momentum in the business environment continues to weaken, which is consistent with weak economic results. The volume of new orders is decreasing and the inflow of new investments has fallen to an average level that has a negative trend, capacity utilization is unstable and lower than a year ago. Retail and construction are weak. Survey data also indicate low price pressure.

So far, all the positive things about the Australian economy are described by the good results of the mining sector. This means that the likely U-turn in the US stock market, which will be accompanied by a drop in commodity prices, will knock out the last support from under the Aussie bulls.

The AUD/USD pair returned to the 0.6830/60 zone, which not so long ago was the former support. Two scenarios are possible here: either a rebound down and an update of a minimum of 0.6675, or another growth wave to the border of the channel 0.6980/90, and only there a U-turn will take shape. As long as the markets remain positive, the second option looks a bit more likely.