The New Zealand dollar was hit by the formidable US dollar and touched new lows despite encouraging data in New Zealand. The main event for the week is a speech by RBNZ governor Wheeler. Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.
New Zealand enjoyed a very healthy job market in Q3: employment grew by 0.8% and the unemployment rate fell to 5.4%. The internal figures were also promising. This helped the kiwi, but only for a while. The US dollar enjoyed another advance in employment, falling oil prices and perhaps the mid term elections as well.
[do action=”autoupdate” tag=”NZDUSDUpdate”/]NZD/USD daily graph with support and resistance lines on it. Click to enlarge:
- REINZ HPI: There is no exact publication time at the moment. House prices rose at a moderate pace of 0.2% in September, and are now likely to post a similar advance. It seems that the housing market in Auckland cooled down.
- RBNZ Financial Stability Report: Tuesday, 20:00. The Reserve Bank of New Zealand published a report about financial stability as well as its views about the wider economy twice a year. The publication is accompanied by a press conference, thus providing an opportunity for questions and answers. Governor Graeme Wheeler does not miss an opportunity to try to talk down the kiwi and has intervened in the past in currency markets.
- Business NZ Manufacturing Index: Wednesday, 21:30. Business NZ surveys manufacturers for their forward looking views of the economy. The index rose to a strong 58.1 points in September, and a slide is likely for October.
- FPI: Wednesday, 21:45. As an exporter of food and especially milk, changes in prices certainly matter. September saw a drop of 0.8%, and prices probably continued dropping in October.
* All times are GMT.
NZD/USD Technical Analysis
Kiwi/dollar started the week.
Live chart of NZD/USD:
[do action=”tradingviews” pair=”NZDUSD” interval=”60″/]Technical lines, from top to bottom:
0.8312 was the low point in August 2014 and it also follows the downtrend support line. The next line is 0.8270, which was the low point in September.
Further below, the round levels of 0.82 is certainly worth watching. It is followed by the initial September low of 0.8120.
0.8075 was one of the cycle lows and now works as resistance. Even lower, 0.8050 provided support for the pair back in February and is the last line before the very round figure of 0.80.
0.80 is now key resistance on the upside. Just below, the old resistance line of 0.7975 is coming back to play after capping the pair in October.
0.7930 was a double top in October’s recovery and is important to watch. It is followed by 0.7850.
0.78 is a round number and provided support various times, including recently. Going deeper, 0.7765 worked as support, and is a line to watch on the way down.
0.7715 is stronger support after serving as a cushion for the pair in September 2013. 0.7660 is the new low in November 2014, making it key support.
Below this point, we are back to levels last seen in 2012: 0.7615 is initial support and the critical line is 0.7460.
Downtrend line comes into play
The pair traded above a downtrend support line that accompanied it from July and eventually dropped below this line. However, the recent recovery sent it to tackle the line once again, but couldn’t break above it.
I turn from bearish to neural on NZD/USD
The kiwi fell mostly due to the strength of the US dollar, but the underlying economy in New Zealand looks great. The recent employment report just looks good, no matter how you look at it. Since it’s a quarterly report, it could have an impact for a long time, countering the weak CPI data. Together with perhaps some correction in the dollar, we could see some stability in the NZD.
More kiwi:
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Further reading:
- For a broad view of all the week’s major events worldwide, read the USD outlook.
- For EUR/USD, check out the Euro to Dollar forecast.
- For the Japanese yen, read the USD/JPY forecast.
- For GBP/USD (cable), look into the British Pound forecast.
- For the Australian dollar (Aussie), check out the AUD to USD forecast.
- For USD/CAD (loonie), check out the Canadian dollar forecast.
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