The kiwi enjoyed the rate hike in the past week to make gains against the dollar. Here’s an outlook for the single event that is due in New Zealand, and an updated technical analysis for NZD/USD.
NZD/USD graph with support and resistance lines on it. Click to enlarge:
Alan Bollard was the third central banker in the West to raise the interest rate, lifting it from 2.50% to 2.75%. While this cycle won’t result in the 8.25% rate seen before the crisis, he is expected to raise the rates up to 5%.
- Retail Sales: Published on Sunday at 22:45 GMT. This important consumer related figure recovered last month and saw a rise of 0.5% in volume. This came after a very disappointing drop beforehand. Another small rise is expected this time. It’s also important to note the core retail sales, that rose by 1.1% and are expected to remain almost unchanged this time.
NZD/USD Technical Analysis
Following the move from Friday, NZD/USD fell below 0.6685 and stayed between 0.6560 and 0.6685 during most of the week. But then it made a big leap, pierced above 0.68 as well and bounced only at 0.6910.
The kiwi is currently bound between the support line of 0.68, and the new resistance line of 0.6910. Note that some lines were modified since last week’s outlook.
Looking down, 0.6685 is the next line of support, serving as resistance in the past week, and providing support in the past. Lower, 0.6560 is the year-to-date low and provides strong support. Further support is seen at 0.64 and 0.62, but these lines are quite far at the moment.
Looking up above 0.6910, more resistance is found at 0.70, a round number that already worked in both directions. This is a major barrier. Minor resistance appears at 0.7050, and it’s followed by 0.72, which was a strong line a few months ago. If the kiwi pushes even higher, more resistance is found at 0.7320.
I remain bullish on the kiwi.
After the tightening cycle began with last week’s rate hike, the kiwi will enjoy more interest in carry trades. Also note that the economy is doing quite well, and isn’t really dependent on Europe.
Further reading:
- For a broad view of all the week’s major events worldwide, read the forex weekly outlook.
- For the Euro/Dollar, look into the EUR USD Forecast.
- For the British Pound (sterling), read the GBP/USD forecast.
- For the Australian dollar (Aussie), check out the AUD/USD forecast.
- For USD/CAD (loonie), check out the Canadian dollar forecast.
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