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U.S. ISM-NMI bounced to 55.3

Market Analysis

NZDUSD,  Daily

The U.S. ISM-NMI bounced to 55.3 from an 11-month low of 53.9 in July but a higher 57.4 in June and 56.9 in May, versus a 16-month high of 57.6 in February. The ISM-adjusted ISM-NMI also bounced, to 55.0 from 54.4 in July, versus a higher 57.4 in June and 56.3 in May, an 18-month high of 56.5 in April that was also seen in February, and a 7-month low of 53.9 in March. The ISM-NMI has lost its usual premium over the factory sentiment readings in 2017 with the rise in energy prices that has lifted the factory measures alongside the petro-recovery and associated unwind of excess capacity despite a remarkably weak trajectory for inventories. The ISM-adjusted average of the major surveys to bounce to the high end of the lofty 55-56 range since the 57 cycle-high readings in February and March, following a steep climb in the average from 50 in 4 of the 5 months through September.. Meanwhile, the U.S. trade deficit ticked up to $43.7 bln from $43.5 (was $43.6) bln in June, but a higher $46.4 bln in May, versus a 5-year high of $48.8 bln in January. The July deficit was $0.9 bln narrower than indicated by the “advance” trade report, after a $0.1 bln narrower June figure, with much higher exports, but also higher imports.

The dollar edged briefly higher after the stronger services ISM outcome, taking USDJPY to intra day highs of 109.17 from 109.05, and EURUSD down a few ticks under 1.1920. The NZDUSD also looks interesting and preparing to move and possibly break out, back in the down channel, despite the disappointment Trade report earlier.   The price action is compressing into a downtrend channel as pointed in the Daily chart, in which the pair seems to returning slowly, since it failed to break yesterday the 20-Day MA , but instead it is traded today below that. This weakness can also be confirmed in the 4-hour chart, in which NZDUSD broke 50-period MA. The Daily RSI is still weak at 46.

Therefore a SHORT Daily position was taken on the break of 50-period SMA. Targets were set at based on ATR(14). Hence Target 1 which is an intraday one is at 0.7182  and Target 2 (Daily) is at 0.7140.  Support is at 0.7250.


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Andria Pichidi

Market Analyst


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