The New Zealand dollar was quite resilient in the wake of the Fed rate hike also enjoying some good domestic data. How will it trade into the Christmas holiday? Trade balance is the highlight. Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.
The economy in New Zealand grew by 0.9% q/q, better than expected and also positive in absolute terms. In addition, the kiwi enjoyed a second consecutive rise in milk prices. The historic rate hike in the US was well telegraphed, and while it did boost the greenback, we didn’t see a collapse in the resilient kiwi.
[do action=”autoupdate” tag=”NZDUSDUpdate”/]NZD/USD daily graph with support and resistance lines on it. Click to enlarge:
- Westpac Consumer Sentiment: Sunday, 21:00. This survey of consumer has shown a drop in sentiment in Q2, to 106, from levels above 110 in previous quarters. The figure for Q3 is a bit lagging, but still of importance.
- Visitor Arrivals: Sunday, 21:45. Tourism plays a role in the New Zealand economy, thus the number of arrivals moves the kiwi. After a rise of 0.2% in October, another advance is on the cards for November.
- Credit Card Spending: Monday, 2:00. With retail sales published only once per quarter, the level of spending in plastic cards serves as an indicator for the consumer in New Zealand. A y/y rise of 7.6% has been seen in October.
- Trade Balance: Tuesday, 21:45. The deficit squeezed in October under 1 billion, to 963 million, but still remains high. New Zealand didn’t always have a deficit and this isn’t good news.
NZD/USD Technical Analysis
Kiwi/dollar managed to hold above 0.67 (mentioned last week) and even advanced to higher ground. However, it could not sustain these levels.
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 0.6790 that capped the pair in recent months.
It is followed by the round level of 0.67 that works nicely as support. 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 neutral on NZD/USD
The kiwi dollar remains strong after rising milk prices. In addition, the rate hike in the United States was done with confidence, and this should encourage “risk”, with NZD being a favorite. All this is balanced by a generally stronger USD, but the kiwi could give a fight.
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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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