Search ForexCrunch

The  New Zealand dollar   had a choppy week. The release of quarterly retail sales is expected to dominate the week. Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.

More positive data came out of New Zealand during the week. The  Business NZ Manufacturing Index remained at a strong 56.2 points, reflecting strong growth and showing that the manufacturing sector is also doing well. In the US, the 6 hour long testimony of Janet Yellen conveyed a message of continuity, and did little to move the kiwi.

[do action=”autoupdate” tag=”NZDUSDUpdate”/]

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

NZDUSD Daily Forex Chart February 17 21 2014 technical foreign exchange New Zealand dollar greenback trading

  1. REINZ HPI: Exact timing unavailable at the time of writing. The House Price Index by the Real Estate Institute of New Zealand showed a surprising drop of 1% in December house prices, after 5 consecutive months of rises. The picture probably turned positive in January.
  2. Retail Sales: Sunday, 21:45. Like quite a few other figures, New Zealand publishes changes in the volume of retail sales only once per quarter, enhancing the magnitude of the publication. After a rise of 0.3% in Q3, a bigger rise is expected for Q4, especially as job figures and other indicators have been very promising. Core sales fell by 0.1% in Q3, and are now expected to turn positive as well.
  3. PPI: Wednesday, 21:45. Producer prices have risen by 2.2% at the Input level and at 2.4% at the Output level in Q3. A similar rise of the Producer Price Index is expected now in both measures. While the economy is steaming hot, the global slowdown in price rises will have probably reached New Zealand as well.

NZD/USD  Technical  Analysis

Early in the week, Kiwi/dollar was capped by the 0.8290 line (mentioned last week). It then made a move higher, reaching a peak of 0.8368 before retreating.

Technical lines, from top to bottom:

We start from higher ground this time. The October peak of 0.8544 is the highest level in the background. 0.8435 was the peak in September and was retested in January. It is a strong double top.

The round number of 0.84 is another line of resistance after capping the pair in September and in November.  0.8335  capped a move higher in December and also had a role in the past. The pair fell short of this line in January 2014.

Below,  0.8290  capped the pair several times during December and also served as a clear separator in February.  0.82, worked as support several times: in September, October and also in December. It is somewhat weaker now.

Close by, 0.8150 capped the pair in August and worked as support in March. Lower, 0.8135 provided support for the pair in January 2014.

0.8060 provided support to the pair in January 2014 and is the level to watch. The round number of 0.80 doesn’t have a technical significance, but is certainly psychologically important.

Below 0.80, we find another round number: 0.79. This level was a pivotal line several times in the past. The last line for now is 0.7850, that worked as cushion back in September, before the big rally.

I remain bullish on NZD/USD

The kiwi still enjoys the back wind of the  superb labor market gains. With a rate hike now  an almost certainty for the March meeting, there is still room for gains, as long as the global mood doesn’t sour.

Further reading: