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NZD/USD Forecast Sep. 8-12

The  New Zealand dollar  was hit hard once again, falling to new lows, as milk was an issue once again. Where will this stop? The big event of the week is the rate decision from the RBNZ. Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.

Data was not all bad in New Zealand: the overseas trade index surprised by rising .3%, contrary to expectations for a drop. However, falling milk prices sent the pair below 0.83. In the US, positive data certainly helped,  but the weak Non-Farm Payrolls sent NZD/USD above 0.83, saving it from a worse week.

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NZD/USD  daily chart with support and resistance lines on it. Click to enlarge:

NZDUSD September 8 12 2014 technical analysis fundamental outlook and sentiment

  1. REINZ HPI: Publication time unknown at the moment. The  Real Estate Institute of New Zealand has reported three consecutive months of falls in house prices, a clear change of trend to what has been seen beforehand. After a drop of 0.7% in July, a more moderate slide is expected now.
  2. Manufacturing Sales: Sunday, 22:45. The official statistics  showed a rise of 0.6% in total manufacturing sales in Q1, lower than the two previous quarters. In Q2, a similar small change is likely.
  3. Rate decision: Wednesday, 21:00. The RBNZ surprised markets last time with a statement that implied a longer pause in rate hikes than expected. Despite a fourth consecutive rate hike, the pair began its fall. The central bank often expressed concern about the strong exchange rate, and things have certainly changed since then. Will Wheeler and co. acknowledge the drop and  release a more optimism statement? Or will they try to push the currency lower? Note that the statement is accompanied by a press conference by Wheeler.
  4. Business NZ Manufacturing Index: Thursday, 22:30.  This PMI-like indicator has shown growth for quite some time. However, growth was quite slow of late. After a score of 53 points in July, a slightly stronger number is expected in August. The 50 point mark separates growth from contraction.
  5. FPI: Thursday, 22:45. The Food Price Index is important to New Zealand, that relies on exports of milk among other types of food. After a slide of 0.7% seen in July,  another one is expected in August.

* All times are GMT.

NZD/USD  Technical  Analysis

Kiwi/dollar began the week under pressure and dipped to a new low of 0.8291, under the 0.8312 line (mentioned last week).

Live chart of NZD/USD:

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Technical lines, from top to bottom:

We start from lower ground this time. The round number of 0.85 returns to the chart and now defines the top of the range. 0.8430 is a  low seen in early August 2014 and significant support at the bottom of the range at that time.

The round number of 0.84 was a swing low in June and also capped the pair in August. It is followed by 0.8350, which was the low recorded during August.

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 and 0.81 provide support.

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.

Downtrend support

As the black line shows, the pair is trading alongside downtrend support since the end of July. This line worked perfectly well and allowed the pair to bounce back.

I remain  bearish  on  NZD/USD

The RBNZ  wanted a weaker kiwi and certainly got it. However, it still isn’t time for celebrations, and the central bank is probably going to express its will for lower levels. In addition, despite the weak NFP, the US economy looks great the dollar could continue rising.

More kiwi:  AUDNZD – Aussie Gains Favored As It Holds Above Key Area

Further reading:

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.