10:00 AM (EST)
Friday is here, Non-Farm Payrolls numbers are here, and I am back here on my usual desk after roaming around NYC ‘s Times Square for a few days! It’s sometimes good to get out of your “I’m a true New Yorker, I don’t hang out in touristy places” outfit and become a tourist in your own city. But I still got to enjoy the benefits of having a New York ID, namely getting a local discount on Madame Tussauds tickets. New York is truly the most inspiring place on earth! So the outcome of this week’s BizCation (business vacation) was starting a brand new exciting thing to add to Invest Diva. You’ll find the first infographic at the end of this update (HINT: it’s called “Kiana Diary”) but first! Guess who I’m gonna talk about today?
The one and only, Mr. Kiwi as he dances against Ms. USA on the Forex Dance Floor, people!!
Technical Points
The New Zealand dollar – US dollar pair (NZD/USD) has been trapped inside a descending triangle chart pattern on the daily chart, right above a key support level at 0.61 below the Ichimoku cloud with the RSI heading up above the neutrality area. If you were paying attention during your Forex Coffee Break Video Education Course, you’d know that a descending triangle by nature forms during a downtrend and is normally a continuation pattern. The pair also finally broke below the 23% Fibonacci level which is yet another bearish signal. So from a technical point of view, this could merely be the calm before the storm of further downfalls towards the lows of 2009 with 0.61 as next stop.
However, since we are responsible Invest Diva’s we will NOT rely only on this point of the Invest Diva Diamond Analysis. Before getting into the fundamentals, let’s also take a look at the bigger picture on the monthly chart. The pair seems to remain in the course of forming a Saucer Top chart pattern dating back to 2009. A break below 0.61 is necessary for a bearish confirmation targeting a long term support level in the 0.50 area.
Alternatively, a break above 23% Fibonacci at 0.6870 would change our outlook to bullish with a long term alternative target of 0.7530 and 0.7810 n extension. for now, range trading seems to be the continued preferred strategy.
Suggested stops and limits:
| Support Levels | Turning Point | Resistance Levels |
|---|---|---|
| 0.61 | 0.6870 | 0.7530 |
| 0.50 | 0.7220 | 0.7810 |
*Important Note: The support and resistance levels are not suitable for all traders and largely depend on your account size, margin and leverage. Book a private lesson to learn how to personalize your account based on our trading guide.
Economic Points
New Zealand Side
Historically the month of September brings good news for the countries in the Southern Hemisphere like Australia and New Zealand, and this month September was not exception. It’s the beginning of spring and the Kiwis are in good spirit, looking forward to spend Christmas in bikini Santa outfits. New Zealand’s Q2 GDP grew by 0.4%, which is a bit better than Q1’s 0.2%.
But it is certainly not all rainbows and flowers in the Kiwi land. On an annualized basis, the GDP grew by only 2.4%, which marks the second consecutive quarter of slowing annualized growth. Looking at consumer confidence, it slipped drastically from the previous quarter’s 113.0. In the report 15% of the respondent are expecting bad times in the near-term, with 29% of metropolitan consumers blaming “ineffective government economic policy” and 39% of rural consumers blaming “low dairy prices.” Some employees also don’t feel very secure with their jobs, with 16% of private sector employees expecting bad times ahead, which is a significant switch from the previous quarter’s reading wherein 5.4% of the respondents were thinking happy thoughts. Well, it’s natural for people to be worried. After all, the jobless rate for Q2 2015 did tick higher to 5.9% (5.8% previous).
Businesses don’t seem to be all that upbeat either with the ANZ’s business confidence survey for August got deeper in the negative territory, having the agricultural sector as the main party pooper.
In the nearer term, the recent slew of poor data may convince the RBNZ to cut rates some more. After all, RBNZ Governor Graeme Wheeler did warn that “some further easing in the OCR seems likely.”
US Side
The Fed has been playing with our hearts when it comes to interest rate hike, with their contradicting comments. Friday’s Non-Farm Payroll (NFP) numbers didn’t help with the situation as it came in worse than expected, however it showed growth from previous release. Many analysts are voting to ignore optimistic Yellen comments and don’t see the rate hike to come in any sooner than March 2016.
China’s Side
Developments in China have recently been a major factor in defining the prevailing sentiment in the forex, equities, and other markets.
consumer spending was one of the key factors that allowed China’s Q2 2015 GDP to grow by 1.7% on a quarterly basis and by 7.0% on an annualized basis, with the latter being the target growth rate of the People’s Bank of China (PBOC). And, fortunately for China, the recent official data shows that consumer spending is still robust and is even improving.
if China’s GDP does show a slowdown, we can probably expect more bouts of risk aversion and forex traders fleeing to the safe-havens. But on the flip-side, if China’s GDP growth remains stable or improves, then we can probably expect some demand for the higher-yielding currencies, such as Mr. Kiwi.
Trading Idea
To sum it up, we may not have a real push from Ms. USA any time soon when it comes to a bearish NZD/USD trading strategy. So putting the fundamentals and technicals together, range trading remains the best trading strategy for the time being until another breakout is confirmed for the pair.
OKAY! We are done with today’s update and as promised, I have a little Friday gift for you. Click below to download my very first public post of my up and coming inspirational diary. Please do let me know what you think!
#1 Best Selling Author. Helping you accelerate your retirement with Triple Compounding™ Former engineer on a mission to help 1 million households take control of their finances. Founder & CEO of Invest Diva.
