- Markets largely ignored 'New Zealand Treasury Monthly Economic Report' for the month of May, NZD/USD briefly slipped below the 0.69 handle.
- Treasury Report for May noted that data shows economy has grown at a reasonable pace in 2016, while adding that inflation may 'slightly higher' than forecast in budget update.
- Kiwi also failed to take advantage of the persisting risk-on environment as markets expect a dovish RBNZ in the week ahead.
- NZD/USD slipped below 0.69 handle but found support by daily cloud-top at 0.6894. The pair has edged higher and is currently trading around 0.6925 levels.
- Gains in its OZ counterpart post RBA decision helping upside in the pair.
- Upside finds immediate resistance at 0.6940 (May 4th highs), then 0.6949 (June 6th highs) and 0.6950 (falling trendline).
- Support on the downside is seen at 0.6894 (cloud top), 0.6885 (5-DMA) and further below at 0.6845 (50-DMA).
- We see weakness only on break below cloud base, drag till 0.6845 (50-DMA) then likely. On the upside break above trendline at 0.6950 could see gains till 0.70 levels.
Recommendation: For now we would remain on the sidelines for further confirmation.
