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NZD/USD binary signal - New Zealand Inflation Report - 17 Jul 2017

Signal details
Entry Price: 
0.7330
Close Price: 
0.7319
Direction: 
Low
Expiry Time: 
20:00 GMT
Result: 
ITM
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The New Zealand quarterly inflation report is scheduled for release later tonight at 22:45 GMT. According to the economists polled, expectations are that inflation rate in New Zealand slowed to a pace of 0.2% on a quarterly basis. This is a sharp decline from 1.0% quarterly inflation rate that was posted in the quarter ending March 2017.

The decline in the quarterly inflation rate is expected to impact the annual inflation rate as well. After registering a 2.2% inflation rate in the quarter ending March on a yearly basis, inflation is now expected to slow to 1.8% for the quarter ending June.

This could be very bearish for the New Zealand dollar. Although the RBNZ had previously brushed aside the rise in inflation and stating that inflation will ease back, the markets have been hawkish on the central bank. The markets are pricing in a rate hike from the RBNZ in the medium term. Thus, today's weak inflation report is likely to weigh on the Kiwi dollar to the downside.

The decline in inflation is expected as recent reports showed that food prices pulled back sharply. Food prices were primarily responsible for the surge in inflation rate in the previous quarter. Following the decline in the food prices, this is expected to post a drag on the headline inflation rate as a result.

The weaker than expected rise in inflation will of course keep the RBNZ back on the neutral-dovish path suggesting that New Zealand's interest rates or the overnight cash rate (OCR) will remain unchanged in the foreseeable future.

Based on the above, today's binary options trade recommendation is NZDUSD. The currency pair has posted strong gains over the past few weeks rallying back to the resistance level of 0.7340. This resistance level has held up strongly on a previous retest as well.

Therefore, we purchase daily PUT options in NZDUSD at 0.7330. A break down below this level will suggest further acceleration in the downside momentum following the failure at the resistance level. Thus, NZDUSD is expected to close lower on the day.

binary options signal nzdusd 17 Jul 2017

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. He has no business nor personal relationships with any mentioned government entities or stocks. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion.