NZD/USD Should Get More Attention

The New Zealand dollar / US dollar usually ends lists of currency pairs, and is sometimes just left out of them. The currency is just above the “exotic” grade, enjoys a few positive characteristics, and should gain more attention from currency traders. Here are 5 reasons why.

With a population of less than 4.5 million people, GDP ranked 62nd in the world and a location which seems to be the end of the world, no wonder that the kiwi remains hidden from the eye. The developed economy and free floating currency did help it reach the “minors” and “commodity currencies” lists, but it deserves more.

New Zealand’s closest neighbor, Australia is also considered a minor currency and a commodity currency. It already surpassed the Swiss franc in trading volume and already begins getting the deserved attention. But what about New Zealand?

Here are 5 reasons for checking out NZD/USD:

1. New Zealand is in the growing part of the world. This country did get into a recession following the meltdown of the financial system, but recovered quite quickly. It enjoys trade with Asian countries, which continue growing.
2. Resilient economy: The economy in New Zealand managed to weather two painful earthquakes, and continue growing very nicely. No wonder it has reached record highs.
3. Less speculative commodities: Contrary to Canadian oil and Australian metals, New Zealand exports food, and especially dairy products. These very basic products are always in demand. Fluctuations are smaller.
4. High interest rate: New Zealand currently has an interest rate of 2.50%. This is higher than most Western countries, but still lower than Australia, with 4.75%. This means that it attracts capital, but not the speculative type. Contrary to the days before the financial crisis, when New Zealand had a rate of 8.25%, it is now less popular for carry trading, meaning that it doesn’t plunge on market panics.
5. More predicted movements: Perhaps the most important feature for techies. The movements of NZD/USD are relatively more predictable for technical analysis. This means it trades in relatively clear ranges, and when it breaks above or below, the break is clear. It usually appears in the list of top 5 predictable pairs.