The New Zealand dollar had a balanced week. Good data at home kept the kiwi bid against the USD storm but the currency eventually closed lower. Trade balance is the main event of the week. Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.
The New Zealand economy grew by a full percentage point in Q3 2014, much better than 0.7% expected. Year over year, it grew by 3.3%. This is certainly solid growth that is consistent with the upbeat view of the RBNZ. Also in the US the central bank was hawkish, with Yellen remaining unexcited from the drop in oil prices and seeing rate hikes in 2015.
[do action=”autoupdate” tag=”NZDUSDUpdate”/]NZD/USD daily chart with support and resistance lines on it. Click to enlarge:
- Westpac Consumer Sentiment: Sunday, 21:00. According to the 1500 strong survey, the consumer in New Zealand remains optimistic, albeit less than in the previous three quarters. The score of 116.7 seen in Q2. For Q3, we could see another slide, but with a score above 100, reflecting ongoing optimism.
- Trade Balance: Monday, 21:45. New Zealand suffered from a deficit of 908 million in October, worse than expected and a fourth month of deficits. A squeeze is likely now in this important flow figure.
Markets are set to grind to a halt on December 24th, Christmas Eve, remain completely closed on Christmas, the 25th and hardly see any activity on the 26th (Boxing Day).
* All times are GMT.
NZD/USD Technical Analysis
Kiwi/dollar fell to support at 0.7715 (discussed last week), It then bounced back up, but was rejected. A second fall already saw lower ground, but yet again, the pair recovered nicely.
Live chart of NZD/USD:
[do action=”tradingviews” pair=”NZDUSD” interval=”60″/]Technical lines, from top to bottom:
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 is certainly worth watching. It is followed by the initial September low of 0.8120.
0.8075 was one of the cycle lows and now works as resistance. 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.
0.80 is now key resistance on the upside. Just below, the old resistance line of 0.7975 is coming back to play after capping the pair in October.
0.7930 was a double top in October’s recovery and is important to watch. It is followed by 0.7850.
0.78 is a round number and provided support various times, including recently. Going deeper, 0.7765 worked as support, and is a line to watch now on the way up.
0.7715 is stronger support after serving holding the pair in December. 0.7660 is the new low in November 2014, making it key support.
Below this point, we are back to levels last seen in 2012: 0.7615 is initial support and the critical line is 0.7460.
Wide downtrend channel maintained
As the thick black lines show, the pair is trading within a wide channel that is heading down. The bottom of the channel was tested in December and held up very well.
I remain neutral on NZD/USD
Both economies on both sides of the Pacific remain on a positive path. In the week of Christmas, a big surprise is needed in order to tilt the pair out of balance in either direction.
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- 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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