The New Zealand dollar managed to trade higher, enjoying some calm in markets. The bi-weekly dairy auction is the key event Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.
The New Zealand dollar had the most muted reaction to the global gloom that saw commodity currencies sell off sharply. Its Australian and Canadian peers fared worse. When the mood improved, the kiwi gained. Also the mood in New Zealand improved with a stronger ANZ Business Confidence read. In the US, data was very disappointing, with a very poor jobs report. This doesn’t necessary mean a rise of the kiwi as it draws dark clouds on the global economy.
[do action=”autoupdate” tag=”NZDUSDUpdate”/]NZD/USD daily graph with support and resistance lines on it. Click to enlarge:
- NZIER Business Confidence: Monday, 21:00. This is a quarterly indicator, making every publication quite powerful. After sitting on high ground for many quarters, Q2 saw a sharp fall from 23 to only 5 points, reflecting only minor optimism. Will it fall to negative ground this time?
- GDT Price Index: Tuesday, during the European afternoon. This bi-weekly measure of New Zealand’s most critical export, milk and the other dairy products, always rocks the kiwi despite its volatile nature. After around 10 consecutive falls, we have seen a rebound in the past 3, including a 16.5% rise in the last auction.
NZD/USD Technical Analysis
Kiwi/dollar begin the week trading between the 0.6310 and the 0.64 lines (mentioned last week). It then broke higher.
Live chart of NZD/USD:
[do action=”tradingviews” pair=”NZDUSD” interval=”60″/]Technical lines, from top to bottom:
The low of 0.6940 allowed for a temporary bounce. The round 0.69 level is switched positions to resistance.
0.6860 was a low point as the pair dropped in June 2015. It is followed by the 0.68 level that worked as resistance when the pair was climbing a few years back.
Close by, the July high of 0.6770 serves as resistance. Quite close by, the high of 0.6740 seen in July is another cap.
It is followed by the round level of 0.67 that is a pivotal line in the range. The now previous July low of 0.6650 was a multi-year low and the break below it was not confirmed.
0.6620 is the new 2015 low and for now serves as minor support. The post crisis low of 0.6560 is still of high importance.
Below, the round 0.65 level is of high importance now. The last line is 0.6488, which was the low both in July and in August – a double bottom.
Minor resistance can be found at the October swing high of 0.6440. 6408 works as a pivotal line. Below, 0.6310 provides some support after doing so in early September.
0.6255 seems to be a line of stabilization as seen in September after the second blow down. 0.6210 is the flash crash low. It is followed by 0.6160 that can be noted as a post crisis attempt to recover.
I remain bearish on NZD/USD
While the US is headed towards a rate hike and New Zealand towards a rate cut, this already seems to be priced in for the next week.
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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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