The New Zealand dollar had a calm holiday week after enjoying positive data beforehand. The first week of 2017 features the milk auction, always a market mover for the kiwi. Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.
Before Christmas, New Zealand enjoyed a strong GDP report: the economy grew by 1.1% in Q3, much better than expected. On the other hand, milk prices slid by 0.5% and the trade balance deficit came out wider than expected, at 705 million. In the US, GDP also beat expectations but during the holidays, the greenback treaded water.
Updates:
NZD/USD daily graph with support and resistance lines on it. Click to enlarge:
- GDT Price Index: Tuesday, during the European session. The Global Dairy Trade has enjoyed four consecutive rises in prices, but this was cut short in the last auction: a drop of 0.5%. Will the rises resume in 2017? This is key to the kiwi: milk products are New Zealand’s main exports.
NZD/USD Technical Analysis
Kiwi/dollar settled under the 0.70 level in the holiday week, after suffering beforehand from the Fed’s might.
Technical lines, from top to bottom:
The round number of 0.74 served as resistance and support back in 2015. 0.7330Â was an initial high in 2016.
0.7265 was a swing high in October 2016 and works as resistance. 0.7230 served as support in September 2016.
0.7160 is a pivotal line within the range. 0.7140 worked in both directions in the past months.
0.71, a round number, was a double bottom in October. 0.7075 was a swing low in August and had a role afterward as well. It is followed by 0.7035, the low seen in October 2016.
The round level of 0.70 is still important because of its roundness but it isn’t really strong. The low of 0.6940 allowed for a temporary bounce.
I am bearish on NZD/USD
While the New Zealand economy is looking strong, the USD strength could resume early in 2017, at least until Trump’s inauguration.
