The kiwi was hurt by the drop in retail sales that was reported in the past week. Here’s an outlook for this week’s major events, and a technical analysis for NZD/USD.
NZD/USD graph with support and resistance lines on it. Click to enlarge:
Note: I haven’t made a weekly outlook for the kiwi in a long time, and I’ve received comments that showed interest, so here goes:
- CPI: Published on Monday at 22:45 GMT. New Zealand didn’t follow Australia with raising the interest rates, and one of the reasons is that prices are rising – in the fourth quarter of 2009, prices actually fell by 0.2%. The first quarter is expected to show a rise of 0.6%, back to normal levels. The kiwi will rock around this release.
- Visitor Arrivals: Published on Thursday at 22:45 GMT. The economy of New Zealand depends on tourism, so the number of visitors, especially in the first quarter which is summertime, is very important. The number of visitor dropped last time by 1.9%, and is expected to rise this time.
- Credit Card Spending: Published on Friday at 3:00 GMT. Consumers have been raising their spending in the past 4 months, showing confidence in the direction of the economy. Following the 1.1% growth last time, spending is predicted to grow at a smaller level this time.
NZD/USD Technical Analysis
The weekend gap sent the kiwi to test the 0.72 resistance line, but it failed to breach it and fell within the range, and finally closed at 0.7084.
NZD/USD is currently trading between 0.70, a round number that provided support in recent months, and 0.72, the line it failed to break just now and also a month ago.
Above 0.72, the next line of resistance is 0.7320, which worked as a support and resistance line around the end of 2009. Even higher, 0.7440 was a peak the pair failed to break in January, and also was a point where the kiwi closed before a big fall in October.
Looking down below 0.70, the next support line is 0.68 – this was the lowest line in the past 6 months – the bottom at the beginning of February. Even lower, 0.6685 was a bottom line in September and provides distant support.
I am bullish on NZD/USD.
New Zealand will also enjoy a devaluation of the Chinese yuan, as well as the rise of commodity prices. The inflation figure this week is a key event for a rate hike in the near future.
- For a broad view of all the week’s major event in all currencies, read the forex weekly outlook.
- For the Euro, read the EUR USD Forecast.
- For the British Pound, look into the GBP/USD forecast.
- For the Australian dollar, read the AUD/USD forecast.
- For USD/CAD, check out the Canadian dollar forecast.
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