NZD/USD is moving inside a strong uptrend, as seen on its long-term forex time frames. However, the pair is testing the top of the ascending trend channel on the daily chart, indicating a potential selloff.
Recall that the latest leg of the rally was inspired by a hawkish RBNZ (Reserve Bank of New Zealand) interest rate decision wherein policymakers agreed to hike interest rates. This led traders to buy the New Zealand dollar against most of its currency counterparts in order to take advantage of the positive carry and in expectations of more rate hikes.
Meanwhile, the US dollar has lost its appeal when the March non-farm payrolls figure came in weaker than expected and failed to trigger a drop in the jobless rate. This was followed by a downbeat FOMC meeting minutes release that showed dissent from policymakers when it comes to tightening monetary policy or hiking interest rates.
Export issues, particularly in the milk industry, have undermined Kiwi strength in the past couple of weeks though. This could cause the central bank to take a less upbeat stance in their next monetary policy statement during which they are likely to keep interest rates on hold for the meantime.
A selloff from the current levels, which could be sparked by a dovish RBNZ rhetoric, could last until the middle of the channel. As you can see from the chart, there is an area of interest somewhere between the .8200 to .8300 major psychological levels, as price has consolidated previously there.
On the other hand, an upside break spurred by a hawkish RBNZ rhetoric could lead to a test of the next resistance levels around the .8700 area. Take note though that the RBNZ is wary of further gains in the currency as this could wind up hurting their export industry again. An upbeat rate statement combined with currency jawboning could still lead to New Zealand dollar weakness or at least more consolidation.
There are no major reports lined up from the US economy so far, which suggests that the behavior of this pair could depend mostly on New Zealand events. Data from the economy has been strong so far, save for the recent downturn in dairy exports. Meanwhile, traders are anticipating more jobs weakness for the US economy in the April non-farm payrolls figure release next week.
Prepared by Aayush Jindal, Chief Technical Strategist at Capital Trust Markets
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FTSE Russell to include 11 stocks from China’s STAR Market in global benchmarks
SHANGHAI (Reuters) – Index provider FTSE Russell will add 11 stocks from China’s STAR Market to its global benchmarks, according to a post on its website from Friday.
The move marks the first time shares from Shanghai’s Nasdaq-style STAR Market for stocks in China have been included in a global index.
The 11 stocks include Raytron Technology Co Ltd, Zhejiang HangKe Technology Co Ltd, Montage Technology Co Ltd, Advanced Micro-Fabrication Equipment Inc China.
(Reporting by Josh Horwitz and Samuel Shen in Shanghai; Editing by William Mallard)
UK insurers estimate to pay up to 2.5 billion pounds for coronavirus claims
(Reuters) – The Association of British Insurers (ABI) said on Saturday insurers are likely to pay up to 2.5 billion pounds ($3.50 billion) for UK’s COVID-19 insurance claims incurred in 2020.
The latest estimates include 2 billion pounds for COVID-19 business interruption claims and 500 million pounds for COVID-19 related protection insurance claims, travel insurance claims and other general insurance products.
ABI’s Director General Huw Evans said in a release that the pandemic illustrated some uncomfortable gaps between what people expected to be covered for and what their policy was designed for.
“We need to learn lessons from this unprecedented event and redouble our efforts to improve consumers’ trust in insurance products,” he added.
The insurance trade body said 123,000 claims have been settled with payment so far and a further 9,000 have received partial payments as of mid-January 2021.
($1 = 0.7139 pounds)
(Reporting by Maria Ponnezhath in Bengaluru; Editing by Marguerita Choy)
Oil extends losses as Texas prepares to ramp up output after freeze
By Devika Krishna Kumar
NEW YORK (Reuters) – Oil prices fell for a second day on Friday, retreating further from recent highs, as Texas energy companies began preparations to restart oil and gas fields shuttered by freezing weather and power outages.
Brent crude futures ended the session down $1.02, or 1.6%, at $62.91 a barrel while U.S. West Texas Intermediate (WTI) crude fell $1.28, or 2.1%, to settle at $59.24.
For the week, Brent gained about 0.5% while WTI fell about 0.7%.
This week, both benchmarks had climbed to the highest in more than a year.
“Price pullback thus far appears corrective and is slight within the context of this month’s major upside price acceleration,” said Jim Ritterbusch, president of Ritterbusch and Associates.
Unusually cold weather in Texas and the Plains states curtailed up to 4 million barrels per day (bpd) of crude production and 21 billion cubic feet of natural gas, analysts estimated.
U.S. energy firms this week cut the number of oil rigs operating for the first time since November, according to Baker Hughes data.
Texas refiners halted about a fifth of the nation’s oil processing amid power outages and severe cold.
Companies were expected to prepare for production restarts on Friday as electric power and water services slowly resume, sources said.
“While much of the selling relates to a gradual resumption of power in the Gulf coast region ahead of a significant temperature warmup, the magnitude of this week’s loss of supply may require further discounting given much uncertainty regarding the extent and possible duration of lost output,” Ritterbusch said.
Oil prices fell despite a surprise drop in U.S. crude stockpiles last week, before the big freeze hit. Inventories fell 7.3 million barrels to 461.8 million barrels, their lowest since March, the Energy Information Administration reported on Thursday. [EIA/S]
“Vaccines and the impressive rollouts we’ve seen have delivered strong gains, as have the efforts of OPEC+ – Saudi Arabia, in particular – and the big freeze in Texas, which gave oil prices one final kick this week,” Craig Erlam, senior market analyst at OANDA, said.
“With so many bullish factors now priced in, it seems we’re seeing some of these positions being unwound.”
The United States on Thursday said it was ready to talk to Iran about returning to a 2015 agreement that aimed to prevent Tehran from acquiring nuclear weapons. Still, analysts did not expect near-term reversal of sanctions on Iran that were imposed by the previous U.S. administration.
“This breakthrough increases the probability that we may see Iran returning to the oil market soon, although there is much to be discussed and a new deal will not be a carbon-copy of the 2015 nuclear deal,” said StoneX analyst Kevin Solomon.
(Additional reporting by Ahmad Ghaddar in London and Roslan Khasawneh in Singapore and Sonali Paul in Melbourne; Editing by Marguerita Choy, David Gregorio and Nick Macfie)
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