The New Zealand dollar had a second week of crashes, after the RBNZ reacted to the weak inflation numbers and changed gears. Is the bottom at sight? The action continues in New Zealand with employment data among other events. Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.
The RBNZ has basically ended any hopes of more tightening: the hawkish bias has made way for a neutral one on the rates. And regarding the kiwi, it is still too high for the Bank. This sent the kiwi way down, alongside its commodity currency peers.
[do action=”autoupdate” tag=”NZDUSDUpdate”/]NZD/USD daily chart with support and resistance lines on it. Click to enlarge:
- ANZ Commodity Prices: Tuesday, 00:00. As an exporter of commodities, every indicator matters, even if milk prices now outshine the rest. After a fall of 4.4% in December, some stability is likely now.
- GDT Price Index: Tuesday. The Global Dairy Index is a bi-weekly snapshot at the price of New Zealand’s main export. After a series of drops, dairy products’ prices went up in the past three auctions. A slowdown is likely now.
- Employment data: Tuesday, 21:45. New Zealand reports employment data only once per quarter, making every publication very important. Contrary to the weak inflation numbers, employment is looking quite good and many countries can envy the small island nation. The unemployment rate stands at a low of 5.4% in Q3 after a rise of 0.8% in employment. Also wages were up: 0.5%.
- Graeme Wheeler talks: Tuesday, 23:00. After sending NZD way down, the governor of the RBNZ is set to speak in Christchurch and move the markets. Will he take the opportunity to hit the kiwi once again?
* All times are GMT.
NZD/USD Technical Analysis
Kiwi/dollar began the week with some cautious trading and eventually hit 0.75. From there, the pair fell sharply quickly lost the 0.7370 line (mentioned last week). the pair continued south and reached a new low of 0.7234.
Live chart of NZD/USD:
[do action=”tradingviews” pair=”NZDUSD” interval=”60″/]Technical lines, from top to bottom:
We start from lower ground once again. 0.7715 was stronger support after serving holding the pair in December. 0.7680 worked as support in December and that is where the pair stopped in early January 2015.
Below this point, we are back to levels last seen in 2012: 0.7615 now works as resistance after providing support during January 2015. It is followed closely by 0.7585 which capped the pair on an initial recovery attempt.
The very round number of 0.75 capped the pair just before the big fall and serves as strong resistance. It is followed by 0.7450 that had a role in the past.
The next line is 0.7370, which was a low point in 2011. It is followed by 0.7325, which capped the pair in the middle of 2010.
The recent 2015 low of 0.7235 is now the next support line. It is followed by 0.7180 that served as resistance back in 2010.
The swing low of 0.71 in 2011 provides further support before the very round number of 0.70.
Below this round number, we have 0.6950 and 0.6810.
I am bearish on NZD/USD
The kiwi is now in a downwards trajectory following the shift in the RBNZ. While Wheeler moved from hawkish to neutral, the path to becoming dovish and eventually cutting the rates is not too long. In the US, the strong growth could be compounded with a positive NFP report.
In our latest podcast, we do a Fed rundown analyze the Greek elections and discuss the suffering Aussie
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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