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Minors, NZD/USD Forecast

New Zealand Dollar February 2013 – Strong Kiwi Could

The kiwi enjoyed quite a bit of strength during January, enjoying a healthy economy, good demand and a positive flip in its trade balance: from a deficit of around 500 million to a surplus of the same scale.

The RBNZ was certainly happy with the economic situation, but showed its discontent with the strength of the currency. The rising value of NZD makes exports less competitive and this could eventually be counterproductive for NZD.

* This article is part of the February 2013 monthly forex report. You can download the full report by joining the newsletter in the form below.

However, in the near future, the kiwi could certainly challenge higher highs. The ongoing QE4 program in the US and the relative weakness of Australia could draw more funds into New Zealand.

February features the all-important employment data release. This is a quarterly event, contrary to monthly reports elsewhere. The scarcity makes it very important. Here are the main events to watch out for:

  • February 4th: Labor Cost Index and ANZ commodity prices.
  • 6th: Employment data. A gain of 0.4% in employment is expected, and the unemployment rate is expected to fall from 7.3% to 7.1%, boosting the kiwi.
  • 12th: REINZ HPI
  • 14th: Retail sales. Also here, this is a quarterly report, making it very important.
  • 19th: PPI.
  • 22nd: Credit Card Spending.
  • 26th: Inflation expectations and trade balance.

One thing less to worry about is the scare regarding New Zealand’s milk exports from Fonterra. At the time of writing, the milk has been declared safe. Milk exports certainly impact the kiwi.

NZD/USD Technical Outlook

NZD USD February 2013 Forex Forecast

NZD/USD enjoyed some strength during January but the 84.70 lines works as a perfect cap so far. The lower uptrend support line is very far. A newer, steeper support line accompanies the pair since mid-2012 and is becoming stronger. The pair will eventually have to choose between breaking above 84.70 or falling below uptrend support.

Lines

The round number of 0.90 is in uncharted territory. The float-era high of 0.8842 is the ultimate resistance line.

0.8470 was the peak in 2012 and remains key resistance. The pair temporarily breached this line, but didn’t go too far. 0.8360 was a very impressive cap to the pair during September 2012 and is a key line on the upside.

0.8175 worked well as support during September 2012 and is only minor now. 0.81 is the bottom of the current range, after working as such several times in recent months and also at the beginning of the year.

0.7975, which was a veteran peak back in 2010 returns to play a significant role as the pair stabilizes above the line. A loss would open the door for bigger falls.   The round number of 0.78 worked as support in early 2011 and also in mid-2012 and is the next line.

0.7650 capped the pair on recovery attempts and also worked as resistance in 2009. 0.7450 was a stubborn bottom in May 2012 and was also a swing low in the fall of 2011.

0.7350 is significant on the downside. The pair got close to this line during Q4. The round number of 0.71 was a swing low in 2011 and a break lower would be a bearish signal. Under the round number of 0.70, the next line of support is 0.6815, which worked as such in early 2010.

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.