Kiwi Review 2-6 Jan & Forecast 9-13 Jan 2017

Summary
Liquidity returned fully this week and we saw interesting market movement of even better magnitude as compared to the previous week. I think most market participants were waiting for the NFP. The jobs data came in lower than what was expected, 156k. The unemployment rate increased by 0.1% from 4.6%. The revised NFP number from November was positive and an extra 40 000 jobs were actually created that month. This resulted in greenback strength. We saw the pound losing some ground amid comments made by mother May, the British prime Minister. Her comments suggested the likelihood of a hard brexit. The Japanese Yen on the other hand gained some strength during the day. It could possibly be due to financial flows as there weren’t any top tier economic data from Japan today.

New Zealand’s economic calendar was relatively light the previous week. We only had the Global Dairy Trade Auction on the 3rd of January. The change in the GDT price index continue to fall, with this week’s nudging down by 3.9%. This was a larger drop than what was expected and saw the GDT price index fall to $3 463/tonne.

Kiwi Crosses Summary

– EurNzd
The Euro made some of its loses against the kiwi last week. This was due to the latest reports from the Euro zone whereby inflation is on the rise, confidence is up and economic activity was stronger than initially estimated. The ECB also paused its QE program for the previous week only. This resulted in the euro gaining some ground against the kiwi the last 3 days of the week

– AudNzd
I had a trade plan on this pair last week which was primarily based on my technical analysis. It out not to work the way I had anticipated and this was due to the strong aussie fueled by positive data from Australia. Australia’s Trade Balance came in positive, way better than what was expected. December’s Exports were 7% higher than what was expected while imports were low, they didn’t increase from November. This resulted to a positive Trade Balance of +1243m. Aussie strength continued in that regard.

– NzdUsd
The Kiwi was the strongest last week.I think that market participants, mostly dollar bulls, anticipated more hawkishness from the FOMC minutes which were released midweek. The minutes suggested and somehow showed how the Fed is not sure about Trump’s ability to act on the promises he made through his campaign, that being tax cuts and spending. Most Fed officials the fiscal policy in their forecast. Again it could also be due to dollar taking profit before the NFP. We saw the dollar gaining ground thereafter.

NzdUsd Daily Chart

Price has since broke through the downside of an uptrend channel and currently trading within the downtrend channel with trendlines drawn from November and December highs and also October and November lows. It opened this month between MM2 and MMP at 0.69170. It is now at the role reversal. should price fail to break up this resistance level, a lower high will be formed.

NzdUsd H4 Chart

This week price opened at the weekly pivot. a key level of support held and we saw price make a higher low off it. Price is currently at resistance and we might see the kiwi bulls take it all the way to the weekly bull target.

EurNzd Daily Chart

Price opened at the monthly pivot and hasn't made any major advances beyond or below the MMP. The MMP hold as a strong level of support.

EurNzd H4 Chart

Price has since broke through down what was then support at 1.51571 which was the retested as resistance. It coincides with the 50% fib level and currently trading towards a support level of 1.50390. price opened at the weekly pivot point this week.

AudNzd Daily Chart

Price opened this month at MM2 which coincides with a strong level of support @ 1.0368. It broke through the trend line only to find a key level of resistance at 1.04949. I'm hoping to see it reverse down from this level.

AudNzd H1 Chart

Price opened between the weekly pivot and MM3 this week. Also after having broken through the resistance level of 1.04912. bulls will be looking for buying opportunities once price retraces down to the fib zone which by then will also coincide with the 21

2 thoughts on “Kiwi Review 2-6 Jan & Forecast 9-13 Jan 2017”

  1. Thanks Tsholanang , very good detail analysis . What do you think about potential of carry trade on EURNZD if you are selling high enough to be on the trade for months earning interest daily + pips .

    1. Sorry Daniel for only giving you feedback this late. I have been looking for a proper entry for such a trade. I am confident in my EurNzd plan which I believe price will be high enough for an entry and will leave it for quiet some time.

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