The New Zealand dollar remained on low ground after receiving more blows from the central bank and despite a weak USD. The focus now shifts to trade balance.Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.
Milk prices failed to rise and dropped by 1.3% but the bigger blow to the kiwi came from the GDP report: the economy grew by only 0.2% in Q1, much lower than 0.6% expected and on top of a downwards revision. This erased the gains that the kiwi enjoyed following the dovish message coming out of Washington: the Fed is set to raise the rates only very gradually. This hurt the USD across the board, but less so against the NZD.
[do action=”autoupdate” tag=”NZDUSDUpdate”/]NZD/USD daily chart with support and resistance lines on it. Click to enlarge:
- Westpac Consumer Sentiment: Sunday, 22:00. This quarterly survey of 1500 consumers has been in range in the past three quarters. After reaching 117.4 points in Q4 2014, a drop is on the cards for Q1 2015.
- Visitor Arrivals: Sunday, 22:45. Tourism plays a significant role in the New Zealand economy. The number of arrivals rose by 1.4% in April and probably remained little changed in May.
- Credit Card Spending: Monday, 3:00. With retail sales released only once a quarter, this measure of spending provides updated information. A y/y rise of 7.1% was seen in April and a slightly slower rise is on the cards for May.
- Trade Balance: Thursday, 22:45. This measure gives us information about flows. In the past 4 months, the country enjoyed a surplus, with the level reaching +123 million for April. This time, a deficit is expected with -50 million.
NZD/USD Technical Analysis
Kiwi/dollar made attempts to retake the 0.70 level (mentioned last week), but after several moves, the pair dropped to even lower ground at 0.6860. However, the battle continues.
Live chart of NZD/USD:
[do action=”tradingviews” pair=”NZDUSD” interval=”60″/]Technical lines, from top to bottom:
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 0.7315, which supported the pair in May.
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.
Lower, the round level of 0.71 used to provide support in the past but was breached now. The new low of 0.7064 now works as resistance.
And of course, the very round level of 0.70 looms large and is still a battle line. It also worked as support. roles as support.
Below, the low of 0.6940 is another battle ground. The fresh level of 0.6860 is the next level below.
Looking lower, the round number of 0.68 could provide some support. Below these levels, we have only 0.6650, before the round number of 0.65.
I remain bearish on NZD/USD
After we heard the unequivocal message from the RBNZ, the kiwi could not enjoy the dovish message from the Fed. So, while the Fed is tightening only slowly, the RBNZ is set to cut again in July. The poor GDP read does not help..
In our latest podcast we digest the dollar dove dive, update on Greece and preview next week’s events.
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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