The New Zealand Dollar has dropped dramatically

<p>NZD/USD Range: 0.7382 – 0.7470 Support: 0.7300 Resistance: 0.7500 The New Zealand Dollar has dropped dramatically against all of its major counterparts, hitting a two-month […]</p>



Range: 0.7382 – 0.7470
Support: 0.7300
Resistance: 0.7500
The New Zealand Dollar has dropped dramatically against all of its major counterparts, hitting a two-month low against its US namesake and after Prime Minister John Key spoke out in favor of an interest rate cut in the aftermath of the worst earthquake in 80 years that rocked the city of Christchurch last week. Key said the government would “welcome” a decrease in benchmark borrowing costs. He added that “the market has priced in a cut [and] that would probably be my expectation.” The Reserve Bank of New Zealand is scheduled to hold their regular policy meeting on March 10.


Range: 1.3744 – 1.3787
Support: 1.3700
Resistance: 1.3850


Rate initially edged to $1.3787 before meeting supply from a leveraged fund, the pullback of the high gaining momentum as market reacted to S&P comments concerning Portugal (suggests Portugal could be forced to seek aid from EFSF/IMF). US black box demand cushioned the initial easing ahead of $1.3770, but another round of leveraged supply took rate below the NY base, breaking under support at $1.3750 before marking lows at $1.3744. A mid-sized Swiss account was a noted buyer at the lows. Rate recovered to $1.3755/60 ahead of the European open, with early demand into this session extending the recovery to $1.3770. A break above $1.3770 to allow for a move back toward $1.3780/85 ahead of $1.3800. Light data calendar today, EMU PPI the main focus ahead of Thursday’s ECB rate announcement and Trichet press conference.



Range: 81.83 – 82.03
Support: 81.70
Resistance: 82.80


Dollar opened at Y81.85 in Asia and traded a tight Y81.83-81.96 range. Again interest was largely in the crosses which fell on back of the Nikkei as tensions increase in the MENA region. Reasonable demand is seen in the dollar from Y81.70 trailing down to Y81.50 with stops below and further bids towards Y81.00 again with stops below. Offers are set around Y82.00 and run up towards Y82.20/25. Euro-yen opened at Y112.77 and ranged Y112.53-96 with a soft tone led by the euro-dollar. BOJ Governor Shirakawa stated the BOJ was doing everything it could to beat deflation but would not aim policy at creating inflation. Traders now await the US ADP data at 1315GMT ahead of Friday’s NFP.

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