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The  New Zealand dollar  had its time in the sun and advanced very nicely. The inflation data is the most important release.    Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.

The NZIER Business Confidence plunged to negative territory: -14 points, showing a gloomy mood in Q3. However, milk prices continued rising, this time by 9.9% and the kiwi certainly took advantage of this.  In the US, the situation seems OK but doubts continue regarding the timing of the rate hike.

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

NZDUSD Technical chart October 12 16 2015 New Zealand dollar fundamental analysis

  1. FPI: Sunday, 21:45. While the bi-weekly dairy auction  garners more attention, the Food Price Index is also of  importance. After a fall of 0.5% in August, stability is on the cards now.
  2. Business NZ Manufacturing Index: Wednesday, 21:30. This PMI-like indicator has shown solid growth in recent months, with a score of 55 points in August. A small  drop is on the cards for September.
  3. CPI: Thursday, 21:45. Inflation in New Zealand isn’t going  anywhere fast. This is released only once per quarter, making the  publication even more important. After a rise of 0.4% in Q2, a drop could be  seen for Q3 but expectations stand on a small gain of 0.2%.

NZD/USD  Technical  Analysis

Kiwi/dollar started off the week by rising above 0.65 (mentioned last week). It continued higher but was capped by 0.67.

Live chart of NZD/USD:

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Technical lines, from top to bottom:

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.

0.6620 is the new 2015 low and for now serves as minor support.  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 am neutral    on  NZD/USD

After the big rise, alongside other commodity currencies, we could see the kiwi take a break. The RBNZ could trigger a sell off, but for now, we could see some consolidation.

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Further reading: