With the US elections coming up, I still remain a bull In this regard. I will trade this pair accordingly after the US elections results as I have no idea as to what is going to transpire.
1. Fundamentally I am expecting positive economic data from New Zealand this week. I don’t think that Thursday’s Official Cash Rate cut will dampen the kiwi. Fundamentally, even after the cut, New Zealand will remain a great place for investors.
2. The Kiwi has been the strongest against its peers recently and surged up to new 5 week high last week.
3. The net non-commercial position went further below the waterline, as we saw a decrease in in non-net commercial positions. This means a bullish sentiment.

This week we have vital economic news from New Zealand coming out. We have the Manufacturing PMI, Food Inflation, Electronic Card Retail Sales and the RBNZ’s Official Monetary Policy Statement, where the interest rate decision is going to be announced. The New Zealand dollar saw a gain of more than 1.5% against the Us Dollar as better than expected local economic data came out last week. New Zealand was the latest country with developed economy to join the low rates club with the RBNZ’s cutting what was then a benchmark rate of 2.5%, with cuts in March and August to 2%.

Fundamental Analysis

Manufacturing PMI
It is worth noting that New Zealand’s manufactured exports make up around 85% of all merchandise exports from the country and that makes manufacturing and exporting vital for the country. The manufacturing sector is steadily moving towards more innovative and specialized goods and services that earn higher export revenues. A 56.80 reading is forecasted which would then indicate expansion in the manufacturing sector.

Food Inflation
Food prices in New Zealand edged up 0.1% in September of 2016, following a 0.5% rise in August. Cost went up for fruit and vegetables (1.7%, the same as in August); non-alcoholic beverages (0.5% after being flat in August) and restaurant meals and fast foods (2.1% compared to 2% in August). In contrast, prices fell for meat, poultry, and fish (-2.9% compared to -0.2%) and grocery food (-0.6% compared to -0.5%). On a monthly basis, food prices declined 0.9%, following a 1.3% rise in August. A 0.2% increase is eyed for October. I personally believe that one of the causes would be a rise we saw in Dairy prices as I don’t have data yet for the others.

Electronic Card Retail Sales
This gives an idea of strength in retail as it measures the number of purchases made in debit and credit cards. A positive number will show that there was strength in retail sector for the past month.

Official Monetary Policy Statement
The RNBZ is on a bid to fend the risk off deflation with concern over future inflation expectations. The bank has been maintaining a dovish stance for a while now. With all the data that came out this past week backing up a rate cut at the next Monetary Policy Meeting, one should keep in mind that the RBNZ will be the first central bank to make a policy decision right after the US elections. So it is very unpredictable as to how the markets are going to react in that regard. In the August and September Official Cash Rate decisions, and again in a speech in October, the Reserve Bank gave a strongly worded signal of its intentions stating that further monetary policy easing will be required to ensure that future inflation settles near the middle of the target range of the band. Its most recent interest rate projection roughly split the difference between one and two further Official Cash Rate cuts over the coming months. And given the RBNZ’s apparent preference for taking action at its quarterly Monetary Policy Statements, next Thursday’s decision has long been the obvious candidate for another Official Cash Rate cut. A 0.25% rate cut is expected, which will result to a new 1.75% low. Keep in mind that next week’s rate cut is almost priced into the currency and interest rate markets.

For further reading, I have provided links of sites I utilized the information from to compile the information above.
Monetary Policy Statement Preview
New Zeland Economic Calender
Westpac Weekly Commentary
I will provide a link to Ryan’s Weekly Dollar Forecast later on 🙂

Bulls are still on their quest to take price all the way to their monthly bull target, MM4. Currently price is trading at a resistance level of 0.73214 and immediate support level is seen which coincides with a fib level @ 0.72489. So far we have seen price make a higher low after it came off the 200 Moving average on the 13th of October. The bounce off the 200 Moving Average signaled a change in market direction. Price opened just below the Monthly Pivot Point at 0.71495

Price opened at the Weekly Pivot Point @ 0.71490 after a boring range we saw the previous week between a resistance level of 0.71800 and support level of 0.71114. We then saw an upside break as a result of positive economic data from New Zealand. Price went on to break what was the a key resistance level of 0.72500 during the course. The weekly bull target was surpassed and price found major resistance level @ 0.73355. Should price fail to break this level of resistance, an immediate support level of 0.72625 is seen and coincides with a fib level. This will be a retest as we saw price breaking through it(as resistance) during last week. A bounce off the 21 Moving Average is also eminent, it will act as dynamic support.

We saw the market ranging on the hourly chart on the last two days of the week between a support level of 0.72792 and resistance level of 0.73383. Having had price break down through the 21 Moving Average, this means that the bullish trend is slowing down. Should price break through this resistance level I expect it to go all the way to 0.73500 which is a psych level and a key level of resistance dating back to mid September.

Even though we saw a slight increase in weekly close price, a decrease in both buyers and sellers was also seen. A decrease in net non-commercial positions means a bullish sentiment. net non-commercial position below the waterline

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