Closed in NY at $1.2499 after pulling back from a session high of $1.25358 to $1.2496 in a very quiet London holiday market. Rate recovered to $1.2506 into early Asian trade before risk appetite began to fade. Fonterra lowering the price forecast for 2012/13 (milk prices, a large component of NZ GDP) was cited for this change in outlook, though some suggested a ‘leak’ from this Friday’s Jackson Hole downplaying speculation for US QE3 was dismissed. Euro-yen sales into the Tokyo fix, along with reported black box sales from around $1.2495, were seen driving the rate lower, the break of $1.2490 adding to the downside momentum that took it to a low of $1.2466. Rate recovered through the balance of the session, meeting initial resistance at $1.2488, before edging on to $1.2493 (38.2% $1.2536-1.2466) into early Europe. A break here expected to meet stronger resistance between $1.2500/10 ($1.2501-09 50%-61.8%) ahead of $1.2520. Support seen placed between $1.2455/45, two Asian sovereign accounts have bids below $1.2450. Further demand seen into $1.2430 ($1.2431 Wednesday Aug22 low).
EasyForexNews Research Team