The New Zealand dollar certainly moved on RBNZ action despite the lack of a cut. Employment figures now take center stage . Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.
The RBNZ left rates unchanged but certainly hinted about a cut in December, putting a lot of emphasis on the exchange rate. New Zealand’s trade balance was unfavorable and so were building consents. However, the ANZ Business Confidence returned to positive ground. In the US, the Fed let us know that a December hike is on the cards while GDP was mixed. What’s next?
The kiwi showed some resilience in the last week of the month.
[do action=”autoupdate” tag=”NZDUSDUpdate”/]NZD/USD daily graph with support and resistance lines on it. Click to enlarge:
- ANZ Commodity Prices: Tuesday, 00:00. Commodity exports, mostly the soft ones, are critical for New Zealand. This release is somewhat overshadowed by the milk auction but still carries some weight. After a jump of 5.5% in September, a slide is on the cards for October.
- GDT Price Index: Tuesday, during the European afternoon. After 4 consecutive rises, this important bi-weekly auction saw a drop of 3.1% in the last auction in October. Was it a one-off or a change of course? The release always moves the New Zealand dollar.
- Employment data: Wednesday, 21:45. Employment figures are published only once a quarter in New Zealand, making the publication very significant for the kiwi. After a rise of 0.3% seen in employment in Q2, Q3 will likely see some stability. The unemployment rate stood on 5.9% in Q2. It is also important to note the labor cost index for an indication on inflation. Employment is expected to advance by 0.4% but this may not be sufficient to keep the unemployment rate from rising to 6%. Another advance in Labor Costs is expected: 0.5%.
NZD/USD Technical Analysis
Kiwi/dollar started the week moving a bit higher, above 0.6740 mentioned last week. A dip to 0.6620 was followed by a recovery and the pair returned to the same place.
Live chart of NZD/USD:
[do action=”tradingviews” pair=”NZDUSD” interval=”60″/]Technical lines, from top to bottom:
We start from higher ground this time. 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
While the New Zealand economy is doing OK, the RBNZ certainly prefers a weaker kiwi, and this is achievable with the prospects for a rate hike in the US and a cut in New Zealand.
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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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