NZD/USD Forecast Sep. 12-16

NZD/USD Forecast Sep. 12-16

13 September 2016, 00:05
Raphael Johnson
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The New Zealand dollar reached new levels last seen in 2015 but could not reach the promised land of 0.75. The GDP release is the main event for the upcoming week. Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.

Milk prices enjoyed big gains for the third consecutive time, with 7.7% this time. The higher dairy prices certainly helped NZD/USD. Another factor pushing the pair to the upside was the weakness of the US dollar. The services sector indicator fell sharply and triggered a USD sell-off. However, the greenback eventually recovered.

 

  1. FPI: Monday, 22:45. The Food Price Index is eyed due to New Zealand’s soft-commodity export, even though the GDT Price Index has a bigger impact.
  2. Current Account: Tuesday, 22:45. This quarterly indicator, wider than the higher frequency trade balance, has shown a surplus in Q1 2016: 1.31 billion. It came after 3 quarters of deficits. A return to negative ground could be seen now.
  3. Business NZ Manufacturing Index: Wednesday, 22:30. Manufacturing is growing quite nicely according to this gauge of the sector, which has a PMI-like scale. A score of 55.8 points was seen in August.
  4. GDP: Wednesday, 22:45. Like with many indicators coming out of New Zealand, there is only a sole quarterly publication. In the last 3 quarters, economic growth beat expectations. In Q1, the economy grew by 0.7% q/q. A slightly more moderate growth rate is likely now.

NZD/USD Technical Analysis

Kiwi/dollar made an attempt to rise above resistance at 0.7330 mentioned last week but fell back down.

Technical lines, from top to bottom:

We start from a higher point this time. 0.7740 is the high watermark that capped the pair back in April 2015. It is followed by the round level of 0.76. 0.7460 is the high level seen in September 2016.

The round number of 0.74 served as resistance and support back in 2015. 0.7330 is the high of 2016 so far.

0.7290 was the pre-Brexit peak and serves as high resistance. The next line is 0.7240 which capped the pair in July 2016.

0.7160 worked as support when the kiwi was trading on the much higher ground in 2014. 0.7050 was the peak in April 2015.

The round level of 0.70 is still important because of its roundness but it isn’t really strong. The low of 0.6940allowed for a temporary bounce.

I am bullish on NZD/USD

The New Zealand dollar could enjoy a reminder that the economy is doing well, thanks to a good GDP read. In the US, we could receive a confirmation that a rate hike is out of question.

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