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The  New Zealand dollar  has been in recovery mode, rising despite the drops seen within its commodity currency peers. The highlight of the upcoming week is the rate decision. Here is an outlook for the events moving the kiwi, and an updated technical analysis for NZD/USD.

New Zealand reported a big jump in its term of trade: 7.5% in the third quarter. The figure joins previous positive figures and enable the stabilization of the pair. In the US, the “to taper or not to taper” question remains intact. In the US, Non-Farm Payrolls came out better than expected and provide 5 reasons for QE tapering.

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

NZDUSD Technical analysis December 9 13 fundamental outlook and sentiment for currency trading the New Zealand dollar

  1. Manufacturing Sales: Sunday, 21:45. As the trading week begins, this quarterly indicator will have the chance to impact the kiwi on this volume. After a drop of 2% in the previous quarter, a rise is likely now.
  2. Rate decision: Wednesday, 20:00. The Reserve Bank of New Zealand has maintained the relatively low interest rate of 2.50% since the March 2011 cut. No change is expected now. The accompanying statement will have a strong impact. On one hand, the RBNZ wants a weak New Zealand dollar to support exports and tourism. On the other hand, the cheap price of money could blow a bubble in the housing market. Some speculate that the central bank will raise rates as early as January. We might get hints about the timing of a rate hike in 2014, something that the RBNZ already made public.
  3. FPI: Wednesday, 21:45. As an exporter of food, prices have a strong impact on the economy and on the currency. After a drop of 1% last month, a small tick higher is likely.
  4. Business NZ Manufacturing Index: Thursday, 21:30. This purchasing managers’ index has shown stable growth since December 2012. It is expected to advance from the 55.7 score seen in October. 50 points separate growth from contraction.

* All times are GMT.

NZD/USD  Technical  Analysis

NZD/$ began the week with a slide to the 0.8160 line (mentioned last week). It traded in range above this line and eventually broke higher, tentatively breaking above the 0.8270 line.

Technical lines, from top to bottom:

0.8435 was the peak in September – a peak that triggered a big downfall. After it was broken again, the line switched to support. It is a clear separator.

0.8360 worked in both directions at the beginning of the year: in March as resistance and in April as support. Also more recently, it worked as yet another clear separating line. Below, 0.8270 provided some support during October, and it also worked as resistance in March.

0.8225 was an important line in previous years, and also worked as support recently. 0.8160 capped the pair in August and worked as support in March. The round number of 0.81 worked as resistance in July.

Lower, 0.8050 was a peak back in June and works as support before the very round number of 0.80.

Below 0.80, we find another round number: 0.79. This level was a pivotal line several times in the past. 0.7840 worked as resistance when the pair traded in lower ground earlier in the year.

I am bullish on NZD/USD

With a resilient New Zealand economy accompanied by a resilient currency, the kiwi could continue rising, at least during this week. Things could change in the following week, if the Fed announces QE tapering, and the odds are now certainly higher.

Further reading: