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(BFW) Daily FX View: NZD, CAD Underperform As EUR, JPY Extend Gains

NZD underperforms overnight, continuing recent downtrend of many smaller, growth FX as EUR, JPY continue to gain vs USD.

• NZD lower vs 21 peers
• RBNZ's Wheeler's comments weigh; RBNZ no need to intervene at moment, though concerned about NZD strength, NZD may rise as need to raise rates draws closer; intervention remains option
• NZD/USD lower toward 0.83, where it consolidated during early-Oct.; momentum downward with MACD, stochastics having crossed lower, RSI falling
• Support 0.8194 Oct. 2 low, 0.8163 Aug. 19 high

• JPY gains vs 21 peers overnight, consistent with risk aversion across markets: stocks, commodities lower, periphery bond spreads to Germany mostly wider
• USD/JPY correction toward Oct. low continues; testing ~97 late-Aug. lows; subsequent support 96.57 Oct. 8 low, 95.81 Aug. 8 low

• EUR mixed overnight, with Asia gains reversed after disappointing German IFO business sentiment index
• IFO 107.4 vs est. 108.0, prior 107.7, slipping within uptrend from Oct. 2012
• EUR/USD reached new high since 2011; resistance ~1.425 Oct. 2011 high, 76.4% Fibonacci rebound of 2011-2012 decline

• CAD down vs 17 peers
• USD/CAD extending breach to new Oct. high; next resistance 1.0472 Aug. 27, 28 low, 1.0568 Aug. 23 high
• Move supported by drop in copper since Oct. 22

• MXN risk today from central bank decision;
• 21 of 25 economists in Bloomberg survey call for 25bps cut to 3.50%; 3 see 50bps cut, 2 est. no change; for preview see here
• USD/MXN pressing higher vs 13.00; higher lows since Oct. 17, though unable to close above 13.00, subsequent resistance 13.0380 Oct. 1 low, 13.3440 Oct. 3 high

• NOTE: TJ Marta is an FX strategist who writes for First Word. The observations he makes are his own.