Kiwi Weekly Review_21-25 November 2016

Summary
This week the FX markets were quiet drained around the United States Thanks-Giving holiday. We saw little less Liquidity and volume in that regard. There was economical data from the New Zealand this past week, although most being low impact news.

Core Retail Sales QoQ
Retail spending continued to push higher in the September quarter, with a 0.9% gain in overall sales volumes. Even though spending was up by a modest 0.3%, this still shows a firm underlying picture of spending in the economy. Note that spending continues to be supported by low interest rates, strong population growth, and increased levels of tourist arrivals.

Trade Balance MoM & YoY (Oct)
As an export dependent economy, New Zealand has been seeing a decline in trade balance over the past couple of months.An exporting country like New Zealand would always want to see a rising trade balance because that simply means that they could buy more imports with the same amount of exports. So therefore, with a declining trade balance, New Zealand has to pay more for imports because the exports that keep their economy healthy are failing in relative to the price of imports they need to buy.
We saw a Trade deficit of $846m for October, even though the figure higher was than expected. This comes in following a $1.394m deficit in September.
Exports: $3,897m
Imports: $4,743m

EurNzd
The kiwi has been performing relatively well against the Euro. It continued it’s strength into this past week. The markets continue to price in no ECB rate cut this year, with a 0% chance of a rate hike next month. If ECB President, Draghi, does offer insight into the ECB’s next steps, we will be focused on hearing what they intend to do with their capital key and deposit threshold requirements. All that I know now is that it is looking for ways in which it can lend out most of its debt to prevent a freeze in its 5.5 trillion euro short-term funding market which underpins its financial system.

AudNzd
The Aussie dollar made up for much of last week’s losses. We did not have much economic data coming from Australia this week, apart from a disappointing ‘Construction Work Done’ figures and a speech the two assistant governors. In His speech he stated that the unemployment rate, which has declined over the past year by more than expected, is likely to edge just a little lower over the next two years. That implies that there will be some spare capacity in the labor market for a time.
With low inflation, the RBA expects underlying inflation to remain around 1½ per cent for a few quarters before gradually increasing to more normal levels

NzdJpy
The yens continued to be the worst performing currency this week. Japanese Yen look to the Bank of Japan to guide near-term moves in the Yen, and this is especially true as the recent global bond market sell-off has pushed Japanese Government Bond yields to the BoJ’s stated ceilings. In September BoJ Governor Haruhiko Kuroda and his staff announced the bank would purchase unlimited amounts of JGB’s in order to control rates.

NzdUsd H4 Chart

At the beginning of the week we saw price open just below WM2, @ 0.69886, where the downside trend line held as support. The greenback strength against the kiwi from the previous week was drained down a bit due to this past week's low liquidity due to the Thanks-Giving Holiday. A series of lower-lows and higher lows failed to continue as price broke through the 21 EMA two consecutive times signalling that the downtrend is slowly coming to an end.

AudNzd H4 Chart

The Aussie Dollar opened at 1.04583 against the kiwi at the beginning of the week after getting hammered the previous week due to poor economic data. Price found a key level of support @ 1.04123 which it failed to break. Price went on to break through a level of resistance @ 1.05326 which was retested as support after price failed to break a key level of resistance at WR1 @ 1.0596. At the end of the week Price closed off @ 1.0569.

EurNzd H4 Chart

This week we saw price open at the Weekly Pivot Point, @ 1.5133, which coincides with a key level of resistance. The pair continued to trade through a descending channel with price making an upside cross through the 21 and 55 EMAs and finding resistance on the upside of the descending triangle. Price closed off @ 1.50370 at the end of the week.

NzdJpy H4 Chart

The market has been in an uptrend for the past two weeks now. Price opened @ 77.507 at the beginning of the week. The bulls took it to the weekly bull target on Wednesday after breaking through a then key level of resistance that dates back to early April this year @ 78.254. Price closed off the week after hitting a key level of resistance @ 79.619

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