NZD/USD Breaks to 17 Month High as New Zealand Refrains

NZD/USD finally managed to break the extremely tough 84.70 line and is now trading at levels last seen in September 2011.

One of the drivers of NZD/USD forward was a statement from a  New Zealand official that clearly stated that New Zealand will not participate in currency wars: as a small country, spending money on currency devaluation would be akin to entering a battle with a peashooter, said the official.

The 0.8470 line capped the pair several times in recent months and served as a multiple top. The line was furst challenged much earlier: it was a swing high in February 2012. The next challenge was only in December, but since then the kiwi made more and more attempts.

NZD/USD is now trading at 0.8503. The next significant level is the August 2011 peak of 0.8573. This is followed by 0.8680 which was a separator when the pair traded in very high ground during July 2011. The final line is the peak of 0.8840, which is still very far.

On the downside, 0.8360 is a separator in the previous range, with 0.83 being the most significant level. See the key events and a wider analysis in the recent NZDUSD outlook.

And, a very good figure from the  Business NZ Manufacturing Index also helped. The index leaped from 50.4 to 55.2 points, indicating a shift from muddling along to strong growth. However, it is important to note that employment figures released last week were very disappointing.