The New Zealand dollar suffered from the global turmoil and traded lower, in an unusually choppy manner. Producer price index is the major event this week. Here’s an outlook for the events in New Zealand, and an updated technical analysis for NZD/USD
Last week small drops in Business NZ Manufacturing Index decreasing to 53.2 from 54.3 and REINZ house price index sliding 0.6% after 1.3% gain reflecting a slow week for the NZ economy.
- PPI Input: Tuesday, 22:45. Producer material purchases increased more-than-expected in the first quarter to a seasonally adjusted 2.2%, from 0.9% in the prior quarter. Analysts expected PPI input to gain 0.9% in the last quarter. 1.2% increase is expected.
- PPI Output: Thursday, 22:45. Producer selling prices increased by 1.7% in the first quarter of 2011, well above the 0.6% gain predicted, and beyond the 0.2% increase in the previous quarter. This reading indicates healthy market activity. An increase of 0.8% is forecasted.
- Credit Card Spending: Friday, 3:00. Credit card spending in New Zealand improved in June rising a seasonally adjusted 4.5 percent year-on-year, though less than the 5.5% gain in May indicating better market conditions.
*All times are GMT.
NZD/USD Technical Analysis
We start from a higher peak – 0.8843. It’s closely followed by 0.88 which is also distant resistance.
Below, the previous peak of 0.8675 switched positions to resistance very quickly, and is a strong line now. It is closely followed by 0.8620, which was the lower border of a temporary range. It’s a minor line.
Further support turned resistance is at 0.8580, but managed to play in both directions during July and now as well. It is followed by 0.8410 – which turned into a very important line – capping the recovery.
0.83 became more distinctive a few weeks ago, by separating ranges (like the previous line), and remains of high importance. It managed to work in both directions just now. The kiwi eventually managed to get above this line. 0.8240 proved to be an important line of support some time ago, and worked as minor resistance.
The 81 line, followed by 0.8080 also provided resistance in the past, but are now support. once again. This region provided a cushion after the recovery move.
Below, 0.7975 was a long running peak and proved to be relevant once again as the swing low of the big fall. A drop below this line will open the road to 0.7875, followed by 0.7825.
I remain neutral on NZD/USD.
After the markets seemed to have stabilized, New Zealand’s strong fundamentals can help the currency. But with no QE in the US to push commodities higher, any move is likely to be limited.
- 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
- For the Swiss Franc, see the USD/CHF forecast.