NZD/USD - Cypher pattern on Rate differential, soft milk prices

FX:NZDUSD   New Zealand Dollar/U.S. Dollar
NZD/USD's rise to a high of 0.7325 earlier this month wasn't backed by fundamentals and hence the sell-off seen in the five trading sessions (including today). This was the sentiment echoed by Londinium FX on our finance show today. (Rate differentials suggest more weakness ahead in Cable and NZD/USD             - Londinium FX - https://www.youtube.com/watch?v=3J3pFQBmLh8)

Interest rate differentials remain in favor of dollar strength. The recent improvement in the US data would only widen the spread in favor of USD.

Meanwhile, speculation of RBNZ rate cut in August is strengthening each passing day. Weak inflation reported yesterday, lending restrictions to stem inflow into property investments have only added to rate cut calls. If milk prices dip at the GlobalDairyTrade (GDT) auction today, a rate cut in August would then become a done deal.

Overall, all the arguments suggest the pair is likely to complete the bullish cypher pattern by falling to point D located at 0.6557.
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