NZD/USD Forecast Feb. 15-19

The  New Zealand dollar  had a relatively stable week in comparison to its previous week and to other currencies. The upcoming week is already much busier, with retail sales, milk prices and other events set to impact the pair.  Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.

The  Business NZ Manufacturing Index  remained at high levels and  this, together with the echoes from the jobs report, helped the kiwi weather the big market storm. In the US, data was OK, but the real player in markets was the mood:  tumbling oil prices and bigger worries all weighed on sentiment and also on the kiwi.

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

1. Retail Sales: Monday, 21:45. The volume of  retail sales is published only once a quarter in New Zealand, giving the  announcement extra weight. A nice rise of 1.6% was recorded in Q3, and it could be weaker now. Core sales advanced 1%. Economists now expect 1.5% and 1.1% respectively.
2. Inflation Expectations: Tuesday, 2:00. With also CPI published only once a quarter, this measure of inflation expectations, as measured by the RBNZ, giving us more insight. The annual level was 1.9% in Q3 2015 and perhaps it will be lower for Q4.
3. GDT Price Index: Tuesday, during the European afternoon. Every two weeks we get a snapshot read about New Zealand’s main export: milk. The Global Dairy Trade dropped in the past 3 auctions, with a big plunge of 7.4% last time. Will it bounce now?
4. PPI: Wednesday, 21:45. The  Producer Price Index provides insight into future  consumer prices. PPI Input is the main  indicator and it rose 1.6% last time. PPI Output rose 1.3% last time. Q4 data could be lower.

NZD/USD  Technical  Analysis

Kiwi/dollar mostly traded in the 0.6580 to 0.67 range mentioned last week.

Technical lines, from top to bottom:

We begin from lower ground this time. The round level of 0.70 is already in sight.  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.  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.

Below, we find 0.6415, which cushioned the pair in January, as support. 0.6350 provided support in January 2016.

I remain  bullish  on  NZD/USD

We have seen a lot resilience from the kiwi and now it could get a boost from milk prices, assuming retail sales will not be terrible.

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