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REINZ HPI is the main event this week. Here’s an  outlook  for the events in New  Zealand, and an updated technical analysis for NZD/USD

Last week NZIER Business Confidence remained relatively positive in the third quarter with 25% of surveyed companies predicted an improvement in business conditions over the next 6 months compared to 27% in the previous quarter. However in light of recent global developments it is likely that this reading will decrease in the fourth quarter.

NZD/USD  daily chart with support and resistance lines on it. Click to enlarge:NZD/USD Chart October 10 14 2011

  1. REINZ HPI: Mon-Wed. The REINZ Housing Price Index increased 0.5% following 0.6% drop in the previous month. The main increase was in Auckland and Wellington. The same increase of 0.5% is predicted now.
  2. Business NZ Manufacturing Index: Wednesday, 21:30. Manufacturing activity decreased for a third consecutive month in August reaching 52.9 from 53.2 in the previous month. Nevertheless the reading is still above the 50.0 point line indicating expansion.  A small drop is predicted.
  3. FPI: Wednesday, 21:45. New Zealand food prices dropped by 1.3% in August following seven consecutive months of increases due to seasonal drops in prices of fruits and vegetables. A small increase is forecasted.
  4. G20 Meetings: Fri-Sat. Finance ministers will gather in Pars to discuss proposals for global economic reform discussing the Financial Stability Board (FSB) recommendations regarding bank regulations and debt reduction especially inEurope which will increase tensions in the already troubled continent.

* All times are GMT.

NZD/USD  Technical  Analysis

Kiwi/dollar began the week with a drop and bottomed out only at 0.7468, a new line that didn’t appear  last week). It then made a U-turn and after a struggle around 0.7650, it managed to close on higher ground.

Technical lines from top to bottom:

0.8090 worked as support in June and in July and is the top resistance line.  Below, 0.7975 was a long running peak and provided support back in May and in July. It was run through during the downfall.

0.7895 was minor support in May and is minor resistance now. It was tackled also in September.  A more important line is 0.7825. It capped the pair three times, in January and in September, and provided support in April. This is an area of struggle.

0.7764 was important support in May and managed to slow down the fall. It is weaker now, after being run through.  0.7655 was significant resistance back in February and also in 2010 and is now support once again.

0.7524 was an important line of support at the beginning of the year, and later switched to resistance. It provided some support in October as well. The fresh low of 0.7468 seen in October is a strong line of support.

0.7350, which was significant support at the end of 2010 and also in February is relevant once again.  Further below, 0.720 is another veteran line of support, followed by 0.7100.

I am bearish on NZD/USD.

The kiwi enjoyed the past week’s relief rally, that came on the back of a suspension of the Greek crisis and  positive Non-Farm Payrolls  in the US. Nevertheless, the slowdown in China and the  double downgrade  at home will likely put pressure on the New Zealand dollar.

Further reading:

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