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The  New Zealand dollar  suffered a disappointing employment report and dropped for a third consecutive week. Can it recover now? A report from the central bank and retail sales are the highlights this week  . Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.

New  Zealand’s employment change missed  by rising only 0.7%, and the unemployment rate came out higher than expected at 5.8% instead of falling to 5.5%. In the US, data was mixed with a weak ADP number but some encouraging data as well.

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

NZDUSD May 11 15 2015 technical analysis New Zealand dollar fundamental prediction currency trading

  1. RBNZ Financial Stability Report: Tuesday, 21:00, speech by Governor  Graeme Wheeler 15 minutes later. The Reserve Bank of  New Zealand publishes this important report only  twice per year. The report does not focus solely on financial stability but also discusses the overall situation of the economy, including inflation, which is the Bank’s mandate. Hints about the next policy moves after the weak employment report could be seen in the report and in the press conference.
  2. FPI: Tuesday, 22:45. As an exporter of food commodities, the Food Price Index is important for the currency. After a small rise of 0.1% last month, April could see a minor slide.
  3. Business NZ Manufacturing Index: Wednesday,  22:30.  This PMI like indicator has shown growth  prospects for quite some time.  It hit 54.5 points in March, above the 50 point mark separating growth and contraction. A similar number could be seen now.
  4. Retail Sales: Wednesday, 22:45. As with many other economic indicators from New Zealand, also retail sales are published only once per quarter, giving them more importance. The  volume of sales rose by 1.7% in Q4 2014, with core sales advancing at 1.5%. A slower growth rate is expected now only in the headline figure: 1.6%. Core sales carry expectations of +1.5% once again.

NZD/USD  Technical  Analysis

Kiwi/dollar  began the new week with an attempt to rise but hit resistance at 0.7485 (mentioned last week). It then turned  south, losing 0.7450 and struggling to  bounce back.

Live chart of NZD/USD:

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Technical lines, from top to bottom:

The very round level of 0.80 looms above, but is closely followed by 0.7975, which played a role in the past. 0.7850  is the next important level after caping the pair in December.

The round level of 0.78 played a role in the past and is high resistance. 0.7740, which was the peak in April 2015 is now important resistance.

The round level of 0.77 proved its strength in March 2015 and capped the kiwi’s ascent. Below, 0.7665 is lower resistance, after having this role in December.

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. Another line to watch out for is 0.7550, which separated ranges in March 2015.

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.

I remain  bearish on  NZD/USD

The RBNZ has yet another chance to  push the kiwi lower, and will probably not miss it. In addition, the disappointing employment figures also weigh on NZD.

In this week’s podcast, we take tips from Yellen, discuss commodity currencies and preview next week’s events

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