The Australian and New Zealand Dollars are trading mixed on Tuesday with technical factors contributing to the price action. The Aussie is trading lower after early session strength was thwarted by a technical resistance zone at .6877 to .6925. The Kiwi is also testing a retracement zone, but sellers have hit it as hard as the Aussie.
Based on the price action in the safe-haven Treasurys, gold and Japanese Yen, and the weakness in the U.S. stock markets, the price action in the Aussie and Kiwi may be a reaction to a dip in demand for risky assets.
Traders are also moving money into the U.S. Dollar as they waited for the British parliament to vote on the Withdrawal Agreement bill as it will shine light on when and how Britain will exit the European Union.
According to CNBC, “the United Kingdom is expected to leave the European Union on October 31, but the deal Prime Minister Boris Johnson and his European counterparts agreed to last week has not been yet voted on in Britain’s parliament, which forced Johnson to request an extension to the leaving date from Brussels.”
“The bill is expected to be presented for a vote in parliament around 1800 GMT.
The early price action suggests the selling may be greater than the buying at current price levels. Traders are lightening up on the long side because of technical resistance and uncertainty of the Brexit vote.
If both the Aussie and the Kiwi close lower today then technical closing price reversal tops will form. If confirmed on Wednesday, this could lead to the start of 2 to 3 day corrections.
Traders are continuing to monitor the progress of the U.S.-China trade talks. Based on the comments from U.S. and Chinese officials, progress is being made on the first phase of the partial agreement. However, they are not certain when the agreement will be completed and signed. President Trump says he would like to sign it next month when he meets with Chinese leader Xi Jinping at a conference in Chile, but U.S. Commerce Secretary Wilbur Ross, isn’t so sure.
Finally, the financial markets in Australia continue to indicate that the Reserve Bank of Australia (RBA) will pass on a rate cut in November and probably cut to 50 basis points early next year. Meanwhile, the Reserve Bank of New Zealand (RBNZ) is expected to trim rates by 25-basis points next month.
This article was originally posted on FX Empire
More From FXEMPIRE:
- Natural Gas Price Fundamental Daily Forecast – Warmer Shift in Weather Reduces Speculative Demand
- GBP/USD Daily Forecast – Sterling Rally at Risk as Brexit Deadline Looms
- EUR/USD Mid-Session Technical Analysis for October 22, 2019
- Crude Oil Price Update – Holding Above $52.94 Will Generate Upside Bias
- AUD/USD, NZD/USD, USD/CNY – Asian Session Daily Forecast
- EUR/USD Daily Forecast – Euro Snaps 4-day Winning Streak