The New Zealand dollar struggled to recover. Retail sales and milk prices take center stage. Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.
The RBNZ’s financial stability report expressed worries about falling milk prices and elevated house prices in Auckland, but failed to rock the boat as currency movements weren’t mentioned. In the US, a rate hike is gradually getting closer.
[do action=”autoupdate” tag=”NZDUSDUpdate”/]NZD/USD daily graph with support and resistance lines on it. Click to enlarge:
- Retail sales: Sunday, 21:45. This key figure, like many others, is released only once per quarter in New Zealand. In Q2, both the headlines sales number and core retail sales rose by only 0.1% q/q. This time, a rise of 1% is expected in headline sales and 1.4% in core sales.
- Inflation Expectations: Tuesday, 2:00. With official CPI data published only once per quarter, this additional quarterly publication provides another view
- GDT Price Index: Tuesday, during the day. This bi-weekly release always rattles the kiwi. In the past two auctions, the Global Dairy Trade showed a drop. As milk and its by-products are critical for New Zealand, a rise is certainly needed.
- PPI: Wednesday, 21:45. Producer prices serve as another measure of inflation. The primary number, PPI Input, dropped by 0.3% in Q2. PPI Output fell by 0.2%.
- Credit Card Spending: Friday, 2:00. This measure of consumer spending fills the gap that the quarterly publication of retail sales leaves. Year over year, spending advanced by 7.3% in September. A similar figure is on the cards for October.
NZD/USD Technical Analysis
Kiwi/dollar started the week consolidating in the lower range under 0.65 (mentioned last week)
Live chart of NZD/USD:
[do action=”tradingviews” pair=”NZDUSD” interval=”60″/]Technical lines, from top to bottom:
0.7075 is where the pair found support back May. It is naturally followed by the very round level of 0.70.
The low of 0.6940 allowed for a temporary bounce. The round 0.69 level is switched positions to resistance.
0.6860 was a low point as the pair dropped in June 2015. It is followed by the 0.68 level that worked as resistance when the pair was climbing a few years back.
Close by, the July high of 0.6770 serves as resistance. Quite close by, the high of 0.6740 seen in July is another cap.
It is followed by the round level of 0.67 that is a pivotal line in the range. The now previous July low of 0.6650 was a multi-year low and the break below it was not confirmed.
0.6615 was a low point in October and is closely watched. The post crisis low of 0.6560 is still of high importance.
Below, the round 0.65 level is of high importance now. The last line is 0.6488, which was the low both in July and in August – a double bottom.
Minor resistance can be found at the October swing high of 0.6440. 6408 works as a pivotal line. Below, 0.6310 provides some support after doing so in early September.
I remain bearish on NZD/USD
Retail sales could join other weak figures in New Zealand and weigh down on the kiwi, and so could milk prices.
In our latest podcast we discuss the December decision driving the dollar, declining oil and more:
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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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