The New Zealand dollar was unable to weather the dollar storm, and extended its falls. Will it fall on its feet now? The kiwi faces the milk auction as well as well as the quarterly inflation figure. Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.
Data in New Zealand such as the Business NZ Manufacturing Index looked upbeat, but this did not help the NZD against the soaring USD. Higher expectations for a rate hike following the Fed minutes as well as OK data kept the greenback bid.
[do action=”autoupdate” tag=”NZDUSDUpdate”/]NZD/USD daily graph with support and resistance lines on it. Click to enlarge:
- CPI: Monday, 21:45. New Zealand publishes inflation figures only once per quarter, making the publication more meaningful than in other countries. After a moderate rise of 0.4% in consumer prices back in Q2 2016. This time, no change in prices is expected. A drop in prices could add pressure on the RBNZ to slash interest rates once again.
- GDT Price Index: Tuesday, during the European afternoon. The Global Dairy Trade is important for the kiwi, as it reflects the fluctuations in the price of milk. After several positive auctions, the last bi-weekly release ended in a drop of 3%. A bounce could be seen now.
- Visitor Arrivals: Thursday, 21:45. Tourism is also fundamental to the New Zealand economy. A drop of 1.9% was reported in August. Another one could be seen now, before the season begins.
- Credit Card Spending: Friday, 2:00. This measure of consumption complements the quarterly retail sales report. An annual rise of 1.9% was seen in the volume of plastic card usage back in August.
NZD/USD Technical Analysis
Kiwi/dollar remained under pressure, falling below the 0.7140 level (mentioned last week) and never recovering.
Technical lines, from top to bottom:
The round number of 0.74 served as resistance and support back in 2015. 0.7330 is the high of 2016 so far.
0.7290 was the pre-Brexit peak and serves as high resistance. The next line is 0.7240 which capped the pair in July 2016.
0.7160 worked as support when the kiwi was trading on the much higher ground in 2014. 0.7035 was the low of October 2016 and is the last barrier before the round level.
The round level of 0.70 is still important because of its roundness but it isn’t really strong. The low of 0.6940 allowed for a temporary bounce.
I remain bearish on NZD/USD
The US dollar remains dominant. Only superb New Zealand data can help the kiwi now.
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