Search ForexCrunch

The  New Zealand dollar  was hit by the formidable US dollar and touched new lows despite encouraging data in New Zealand. The main event for the week is a speech by RBNZ governor Wheeler. Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.

New Zealand  enjoyed a very healthy job market in Q3:  employment grew by 0.8% and the unemployment rate fell to 5.4%. The internal figures were also promising. This helped the kiwi, but only for a while. The US dollar enjoyed  another advance in employment, falling oil prices and perhaps the mid term elections as well.

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

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

NZDUSD November 10 14 2014 technical analysis for trading New Zealand dollar USD fundamental outlook

  1.  REINZ HPI:  There is no exact publication time at the moment. House prices rose at a moderate pace of 0.2% in September, and are now likely to post a similar advance. It seems that the housing market in Auckland cooled down.
  2. RBNZ Financial Stability Report: Tuesday, 20:00. The Reserve Bank of New Zealand published a report about financial stability as well as its views about the wider economy twice a year. The publication is accompanied by a press conference, thus  providing an opportunity for questions and answers. Governor  Graeme Wheeler does not miss an opportunity to try to talk down the kiwi and has intervened in the past in currency markets.
  3. Business NZ Manufacturing Index: Wednesday, 21:30. Business  NZ surveys manufacturers for their forward looking views of the economy. The index rose to a strong 58.1 points in September, and a slide is likely for October.
  4. FPI: Wednesday, 21:45. As an exporter of food and especially milk, changes in prices certainly matter. September saw a drop of 0.8%, and prices probably continued dropping in October.

* All times are GMT.

NZD/USD  Technical  Analysis

Kiwi/dollar started the week.

Live chart of NZD/USD:

[do action=”tradingviews” pair=”NZDUSD” interval=”60″/]

Technical lines, from top to bottom:

0.8312 was the low point in August 2014 and it also follows the downtrend support line. The next line  is 0.8270, which was the low point in September.

Further below, the round levels of 0.82 is certainly worth watching. It is followed by the  initial September low of 0.8120.

0.8075 was one of the cycle  lows and now works as resistance.  Even lower, 0.8050 provided support for the pair back in February and is the last line before the very round figure of 0.80.

0.80 is now key resistance on the upside. Just below, the old  resistance line of 0.7975 is coming back to play after capping the pair in October.

0.7930 was a double top in October’s recovery and is important to watch. It is followed by 0.7850.

0.78 is a round number and provided support various times, including recently. Going deeper, 0.7765 worked as support, and is a line to watch on the way down.

0.7715 is stronger support after serving as a cushion for the pair in September 2013.  0.7660 is the new low in November 2014, making it key support.

Below this point, we are back to levels last seen in 2012: 0.7615 is initial support and the critical line is 0.7460.

Downtrend line comes into play

The pair traded above a downtrend support line that  accompanied it from July and eventually dropped below this line. However, the recent recovery sent it to tackle the line once again, but couldn’t break above it.

I turn from bearish to neural  on  NZD/USD

The kiwi fell mostly due to the strength of the US dollar, but the underlying economy in New Zealand looks great. The recent employment report just looks good, no matter how you look at it. Since it’s a quarterly report, it could have an impact for a long time,  countering the weak CPI data. Together with perhaps some correction in the dollar, we could see some stability in the NZD.

More kiwi:

In our latest podcast, we  run down the ECB, talk about the huge Japanese move, preview the UK and also talk about Brazil:

Download it directly here.

Subscribe to our podcast  on iTunes.

Further reading: