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NZDUSD Technical Analysis | New Zealand Event Risks


Aug.16.2016

NZDUSD Technical Analysis | New Zealand Event Risks

For both long and short term kiwi traders, this week could be full of indications. First off, NZDUSD Technical Analysis shows an attempt to breakout. Second, we have top tier economic risk events coming up for Mr. Kiwi as he dances against Ms. USA. Huddle up and read on!

NZDUSD Technical Analysis New Zealand Event Risks

 

US Dollar is Getting Pretty Weak

So What's up with Ms. USA's sudden sellout while there were even any data coming out last night? We could attribute that to a few factors:

1- Summer vacation for boy of Wall Street, and therefore less volume in trading

2- A bunch of data fueling speculation that the Fed will be slow to raise interest rates. The Citigroup Inc. U.S. Economic Surprise Index, which measures whether data beat or miss analyst forecasts, is at the lowest in more than a month. And now, policy makers are also casting doubts on the path of monetary policy, with San Francisco Fed President John Williams saying that the central bank’s policy of targeting low inflation will no longer make sense.

 

Ms. USA's weakness is gaining momentum as we reach the end of summer... Could it get back on track once the kids go back to school? We may need an ultra interest-rate-hike-friendly Fed signal for that to happen too I guess.

Kiwi related Economic Calendar

We have three market moving events this week which could make or break the pair’s current bullish sentiment.

1- Global Dairy Trade auction

First off is the Global Dairy Trade auction which will be released tentatively on Tuesday during the Sydney session. In the previous GDT auction, the dairy index posted a strong 6.6% jump after staying flat during the earlier instance, leading most market participants to anticipate a rebound in the industry. Another impressive reading this week could reinforce expectations of higher trade revenues and growth figures while a sharp decline in prices could lead to a weaker outlook.

2- New Zealand's Jobs Report

Next we have the quarterly employment report on Tuesday night at 10:45 PM GMT.

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For the second quarter of the year, employment is expected to have increased by only 0.6% while the unemployment rate is expected to have fallen from 5.7% to 5.3%.

3- New Zealand's Producer Price Index

Last but certainly not least is New Zealand’s PPI readings also on Tuesday at 10:45 PM GMT.  Another round of negative PPI readings could keep expectations running for more RBNZ interest rate cuts this year, especially since RBNZ Governor Wheeler and his fellow policymakers are already worried about inflation.  To downplay rate cut hopes, the actual readings would have to come in way better than expected and this doesn’t seem like an easy feat.

 

NZDUSD Technical Analysis

The NZD/USD pair is attempting a third attack to the resistance and 38% Fibonacci level at 0.7250 on the daily chart, while remaining above the Ichimoku cloud. The pivot levels are set at 0.7120 and 0.70 with supports at 0.69 and 0.68 in extension. If you are scratching your head with this, you should get my book's new edition right now. As Stanley Kohlenberg puts it, it is "A simple guide ANY trader can use to analyze and plan before risking their time and money." 

NZDUSD technical analysis NZDUSD technical analysis

Trading Strategy

A break above resistance could indicate a continuation in the bullish sentiment. Only a break below the Ichimoku cloud could change our outlook to bearish.

Long-term traders should wait for the data and wait a little bit longer before confirming a trading strategy.

More on Economic Calendar

Tuesday

Sydney session: First off today during the Sydney session was the RBA Aug. Meeting Minutes at 1:30 AM GMT.

London Session: Moving forward during the London session we have UK’s Consumer Price Index released at 8:30 AM GMT along with other market moving data which could give the GBP another push depending on the outcome.

New York Session: The US will release their Consumer Price Index during the New York session at 12:30 PM GMT followed by their Industrial Production at 1:15 PM. During the next day’s Sydney session we are expecting New Zealand’s Unemployment Rate and Employment Change at 10:45 PM to end the busy trading day.

 

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Wednesday

London Session: During the London session today  we have the UK’s employment change at 8:30 AM GMT followed by the Swiss ZEW Survey (Expectations)  at 9 AM.

New York Session: Later during the New York session the FOMC Meeting Minutes for the JULY 27 meeting will be out, providing us in-depth insights into the economic and financial conditions that influenced their vote on where to set interest rates.

Sydney session:During the next day’s Asian session Japan will release a number of data at 11:50 PM GMT including their Merchandise Trade Balance Total for July, and a positive percentage change can indicate that export growth has exceeded import growth which could create volatility in the Japanese Yen.

 

Here are Invest Diva's calculations for important NZD/USD  approximate levels to keep an eye on:

Support Levels Turning Point Resistance Levels
0.68 0.70 0.7250
0.69 0.7120 0.74

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 xoxo

Kiana 喜愛成
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