The New Zealand dollar moved on the important RBNZ decision and pretty much liked it. In the last full week of the year we have milk prices and GDP standing out. Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.
The Reserve Bank of New Zealand said its word: rates were cut but are expected to remain steady for some time. In addition, the RBNZ did not seem too worried about the exchange rate, calling it “unhelpful” but not “unjustified”. This gave the kiwi a boost. In the US, tension is rising towards the all important Fed decision, which is at some risk because of market turmoil.
[do action=”autoupdate” tag=”NZDUSDUpdate”/]NZD/USD daily graph with support and resistance lines on it. Click to enlarge:
- GDT Price Index: Tuesday, during the European afternoon. After 3 consecutive drops, the Global Dairy Trade rose by 3.6% in the previous auction. Milk and related products are New Zealand’s primary exports. Will we see another rise?
- Current Account: Tuesday, 21:45. In Q2, New Zealand posted a current account deficit of 1.22 billion, more or less within expectations. Has it returned to a surplus in Q3? History tells us that big deficits are seen in the third quarter and expectations stand at -4.85 billion.
- GDP: Wednesday, 21:45. The economy in New Zealand grew by 0.4% in Q2. slower than had been anticipated, but faster than in Q2. All in all, the economy is doing well, but slowing down from time to time.
- ANZ Business Confidence: Friday, 00:00. In the past two months, this 1500 strong survey stood on positive ground, returning from the lows seen earlier in the year. In November, it scored 14.6 points.
NZD/USD Technical Analysis
Kiwi/dollar traded nicely above 0.66 (mentioned last week). It then continued advancing, settling above 0.67.
Live chart of NZD/USD:
[do action=”tradingviews” pair=”NZDUSD” interval=”60″/]Technical lines, from top to bottom:
0.7075 is where the pair found support back May. It is naturally followed by the very round level of 0.70.
The low of 0.6940 allowed for a temporary bounce. The round 0.69 level has 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.
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 was a pivotal line in the high range. Another line worth noting is 0.6640, which capped the pair in November.
The post crisis low of 0.6560 is still of importance. Below, the round 0.65 level is of high importance now, serving as support.
I am bearish on NZD/USD
While the RBNZ isn’t that worried with the current exchange rate, it might get worried if it continues rising. In the US, the historic rate cut comes amid market turmoil, but is set to strengthen the dollar.
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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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