NZD/USD Technical Analysis September 9, 2011

The NZD/USD pair rose, and then fell on Thursday as traders begin to ask even more questions about the global economy. The pair is extremely risk-sensitive, and will fall as more and more fear enters the marketplace. The pair is in a massive consolidation area, but a breaking of the lows on Thursday would have us selling, and aiming to get back down to the 0.81 level. If we get above the highs on Thursday, there is still resistance above until we get to 0.86 or so, keeping us on the sidelines.

Obama Needs “Big Speech” to Move Economy

Judging from the reaction in the financial markets, traders don’t expect much from tonight’s speech by President Obama. If you had asked me to comment yesterday, I probably would have said traders are looking for something bullish. Today’s sell-off in U.S equity markets and the slight bullishness in the Treasury Bonds and U.S. Dollar are all indications that uncertainty prevails.

Tonight’s speech may turn into a “not what he says, but how he says it” scenario. In other words, in the absence of proposing stimulus that will be readily acceptable by both Democrats and Republicans, how the President makes his proposal is likely to sway market participants.

In what the White House has been dubbing “the Big Speech”, Obama is going to have to knock it out of the park with his proposal to stimulate the economy and create jobs. This is either going to be done with Obama coming out swinging and blaming Congress, the S&P Corporation as well as Europe for all of the U.S. problems, or he’s going to take the conciliatory route and accept some or all of the blame.

Traders are likely to be paying more attention to how he says it rather than what he says. This means he is going to have to make specific proposals, speech with a firm tone and call for immediate action. Given the way the debt ceiling crisis was handled in early August, the worst thing he can do is propose something that is going to take months to deliver.

Going into the speech, it is clear that market participants are tired of the speeches and want action. Obama loves to give speeches; however, traders want to hear something big and bold at this time. History is working against him since may “big speeches” since the Great Depression have failed to move the economy.

With the 2012 election rapidly approaching, Obama is going to have to deliver or the Republicans are going to continue to bury his presidency. This means that traders have to be prepared for a few surprises. With the markets indicating that traders are not expecting too much from the speech, traders are hinting that the Fed announcement on September 21 is likely to carry more weight.

If Obama proposes a substantial proposal that appears to be something that Democrats and Republicans can work with and put into action quickly, look for equity markets to rise and the Treasury Bonds and U.S. Dollar to weaken.  This may only be a short-term reaction but none-the-less, it may be enough to carry the market out of its recent hole. If his speech lacks conviction, then equity markets are likely to fall with traders seeking shelter in the U.S. Dollar and Treasury Bonds.

No matter what he says, lingering sovereign debt issues in the Euro Zone are likely to continue to push the global economy to the brink of another recession. Unless Obama can convince investors that our economy would be fine if not for the problems in Europe and let investors know that he has their backs like Bernanke did at Jackson Hole in late August, then nothing he says is likely to have a lasting bullish effect on the risk markets .


NZD/USD Technical Analysis September 8, 2011

The NZD/USD pair rallied during the Wednesday session, although it did not manage to gain enough to clear the top of the shooting star-like candle from Tuesday. The trend is up still, and we aren’t ready to bet against this trend just yet. Because of this, we are looking for a break above not only 0.84, but 0.85 as well to go long. A short isn’t possible until we are below the 0.8000 level.

NZD/USD Technical Analysis September 7, 2011

NZD/USD fell hard during the Tuesday session, after initially rising in value. The pair looks like it is trying to find the 0.81 to 0.80 level for support and the daily candle for Tuesday is forming a shooting star-shaped candle to emphasize that idea. The pair has recently made a lower high, and if we can manage to break below the 0.80 area – look out below. The breaking of the Tuesday low is a reasonable sell signal, but as I mentioned earlier – 0.81 is the start of serious support.

NZD/USD Technical Analysis September 6, 2011

NZD/USD looks bearish to say the least. However, it should be noted that the long red candle is presently in the center of a large cluster of orders to the left, and should find this area quite a bit more challenging than the 100 pips or so above it. The pair is massively bullish overall, but the last high being lower than the one before has us laying off this pair for a while. It appears that the most likely scenario is consolidation at this time, albeit in a fairly wide range – perhaps form 0.8000 to 0.8500 or so. A breaking of the 0.8600 barrier becomes a bullish signal in this market, as a breaking below the 0.8000 level is very bearish.

NZD/USD Technical Analysis September 5, 2011

NZD/USD fell back through the 0.85 level as the Non-Farm Payroll numbers came out in the US, and showed that there were no jobs added in August. The 0.84 level held as support, and appears to have caused a minor bounce. We feel this level should continue to keep this pair aloft for a while, and we could see consolidation between the 0.84 and 0.86 levels for the foreseeable future in this pair. A break below 0.84 doesn’t get us selling – it only gets us anticipating the opportunity to buy the Kiwi dollar at the 0.8000 level below.

NZD/USD Technical Analysis for the Week of September 5, 2011

The NZD/USD pair rose during the previous week, but struggled to get above the 0.85 for any significant amount of time. The resulting weekly candle is a shooting star, and this pair looks like it is heading lower at the moment. The pair isn’t bearish however, but rather could be a sign that we are about to enter the consolidation area again that is bordered by the 0.85 and 0.80 areas. The pair is decidedly bullish, so instead of selling, we would prefer to see some kind of buy signal a little lower in order to go long of this pair.

NZD/USD Technical Analysis September 2, 2011

The NZD/USD formed a hammer on Thursday, after forming a shooting star on Wednesday. The 0.85 level is shaping up to be a significant battle area, and could determine the short-term future for this pair. The breaking above the high on Wednesday could prove this pair to be strong enough to rise more. A breaking of the lows on Thursday would be very bearish. The Non-Farm Payroll report will more than likely throw this pair around in the New York morning, and as such – we think waiting until the closing of the daily candle might be the best way to find your signal in this pair.

NZD USD – September Outlook

After posting a new all-time high at .8842, the NZD USD sold off sharply as investors shed risky assets. Fortunately this sell-off was event driven and not related to a shift in the economy, and the Kiwi stopped at a major 50% level near .7978. From this retracement level, the currency pair rallied back to close at .8541. This close was about 2.84% lower than July’s close.

Despite the hard sell-off in August, the main trend remained up on the monthly chart. Studying this chart, one can see that the market clearly has support at the 50 percent to 61.8 percent retracement zone of the .7114 to .8842 range. This zone is at .7978 to .7774. The market will have to break through this retracement area to signal the start of a sizable correction.

In addition, uptrending Gann angle support from the March 2011 bottom at .7114 is providing solid support. This month the angle moves up to .8074. A move through this angle will serve as a warning that the market is weakening.

Fundamentally theNew Zealand economy appears to be sound. Last month the NZ economy posted a strong trade balance surplus of 129 million, trouncing the estimate of a 124 million deficit by a long-shot. This was the first July trade surplus since 1991. Although it showed a surplus, the figure was significantly lower than the June surplus. In addition, retail sales increased, beating expectations. With the economy on sound ground, expectations are for this trend to continue into September.

The interest rate differential also favors the New Zealand Dollar over the U.S. Dollar. With the Reserve Bank of New Zealand holding interest rates at 2.5% while the U.S. Fed remains soft, money should continue to flow into thisPacific Rim nation.

In late July, the RBNZ expressed concerns about the debt problems in Europe and the U.S., stating that it expected fragility in the global financial markets. Now that the U.S.debt ceiling issue has been resolved, traders are likely to focus on other side of the equation, the New Zealand economy.

At this time the central bank is concerned about the very high value of its currency putting a drag on the economy. If this condition persists, the RBNZ is likely to refrain from any interest rates hikes in the short-term. As the Kiwi gains strength, traders should be aware that the central bank may take action to prevent excessive volatility. Rumors of this taking place may dampen gains and could even make traders nervous enough to trigger a sell-off.


NZD/USD Technical Analysis September 1, 2011

NZD/USD rose again on Wednesday, but formed a second shooting star-shaped candle. This shows that although we broke above the 0.8500 resistance area, the pair is struggling. Because of this, we fell a pullback could be coming in the Kiwi dollar, but are not willing to short it. In fact, we feel that the 0.84 area should be supportive under the supportive 0.8500 level, meaning that we shouldn’t fall too awfully far. Because of that, we are buying dips in this pair until we close below 0.8400 on a large red candle.

NZD/USD Technical Analysis August 31, 2011

The NZD/USD pair broke the 0.85 resistance level on Tuesday, which if you have been watching, you know was our signal. On a daily close – we would go long. Because of this, we are buying this pair now, and with the expected new easing coming out of the Fed in September, (Or at least some form of it) it will make commodities very attractive. With this in mind, we have several reasons to own the Kiwi presently.

NZD/USD Technical Analysis August 30, 2011

The NZD/USD pair continues to move upwards on Monday, as the trading community embraces risk around the world. The pair is certainly bullish, and the break above the 0.84 level shows that this pair is demanding to retest the 0.85 level in order to continue the run north. The pair isn’t’ able to be traded to the long side quite yet, but on a daily close above the 0.85 level – we will be long. We won’t sell it unless we see a close below 0.80, and the commodities markets selling off.

NZD/USD Technical Analysis August 29, 2011

The NZD/USD pair rose rapidly on Friday as the Fed announced that no more QE was needed to facilitate growth in the US presently. This started a rush to risk-related currencies such as the Kiwi dollar. The day ended with a very bullish and long green candle, but also stopped just at the overhead resistance area that has stopped this pair in the 0.84 neighborhood. In reality, we are not willing to buy until we break above the 0.85 level on the daily close. Shorting isn’t possible though, as we would have to see a close below 0.80 level in order to think the pair is going to fall for any significant amount.

NZD/USD Technical Analysis for the Week of August 29, 2011

The NZD/USD pair had a bullish week as traders took on more risk, especially on Friday. Because of this, the pair continues to trade within the boundaries of 0.8000 and 0.8500. These areas need to be broken to consider any longer-term trade, and as such – that is exactly what we are doing. A daily close below 0.8000 sends us lower, but a daily close above the 0.8500 level is very bullish indeed.

NZD/USD Technical Analysis August 26, 2011

The NZD/USD pair fell after first rising on Thursday. The resulting candle was a shooting star, and the pair now looks vulnerable to the downside. However, with Ben Bernanke’s news conference coming out today, there is always the risk of headline news moving the currency markets. If the US goes into another round of quantitative easing, this pair will rise rapidly as commodities in general are bought up. The high-yielding Kiwi will more than likely become a favorite amongst traders again. If the Fed doesn’t announce a QE3-type deal, this pair could continue to act weak. Technically, a break of either end of the candle would point the way in the direction of the break for traders.

NZD/USD Technical Analysis August 25, 2011

The NZD/USD pair fell slightly on Wednesday as the pair continues to consolidate just under the 0.83 level. The area is a minor support and resistance area, and until we get some clear indication out of the Federal Reserve on any future QE3 plans on Friday – we may see very little action in this pair. The Kiwi dollar being a commodity currency will be directly affected by the plans of the Fed for the Dollar. Any hint of QE3 sends this pair much higher on Friday, but until that announcement, it might be a quiet market.

NZD/USD Technical Analysis August 24, 2011

The NZD/USD pair rose on the Tuesday session, and ended at the top of the candle. The candle did stop at the 0.8350 resistance level, which has been tough lately. The pair could react by falling a bit, but it should also me mentioned that the level isn’t a major one. More than likely, the pair continues to rise, and any fall from this level should have the prudent trader watching for bullish and supportive candles – especially around the 0.8000 to 0.8100 levels. The market isn’t sellable until we close below the 0.8000 area. With the especially strong candle on Tuesday, it looks as if this pair is finally ready to move – to the upside.

NZD/USD Daily Fundamental Analysis for August 24, 2011

The New Zealand dollar rose against its US counterpart after the report today showed that executives expect inflation to average 2.86% in two years time, a report from the Reserve Bank of New Zealand.

Meanwhile, the New Zealand dollar also advanced as equities gains boosted demand for the commodity currencies along with cheerful data about the Chinese economy, where China’ industrial production continued to accelerate, adding that New Zealand products will increase on strong demand from China.

The New Zealand economy gives some signs of picking up as rising consumer spending and employment add to evidence the nation’s economy grew modestly in the first quarter, buoyed by record-low interest rates and a surge in commodity prices.

At 22:45 GMT (Tuesday) the market is waiting important data from the New Zealand economy, where the economy is to present its trade data for the month of July after the recorded trade surplus of NZ$230 million in June.

Exports are expected to show an increase during July after rising to NZ$3.97 billion in June, while the nation’s imports showed NZ$3.74 billion in June.

The U.S. durable goods orders for July will be due at 12:30 GMT, where it’s expected to show a rise of 2.0% from the prior drop of 2.1%. On the other hand, the durable goods excluding transportations for July had a previous reading of 0.1%, and expected to drop by 0.6%.

The house price index for June will be released at 14:00 GMT, where the previous reading was up by 0.4% and expected to come at 0.2%. As for the house price purchase index for the second quarter, it had a prior reading of –2.5%.

NZD/USD Technical Analysis August 23, 2011

The NZD/USD pair rose on Monday, and seems to have found a bit of support at the 0.82 level. The pair is decidedly bullish, but the latest action is somewhat contradictory. The 0.8000 level below here is major support, and if it gets broken – we will go much lower. A break to the upside of 0.85 would be massively bullish. Until then, we are likely to meander around these levels.

NZD/USD Daily Fundamental Analysis for August 23, 2011

The second round of quantitative easing in U.S. was part of the reason behind a jump in commodity prices and recorded historical levels along with the increased risk appetite in the market that supported investors demand on commodities, damping the demand for higher yielding currencies such as the New Zealand dollar.

Furthermore, the New Zealand dollar (Kiwi) also slumped to a 2-month low versus the dollar as the European debt crisis escalated once again because of Italy and Spain threat of falling, so investors’ fears are escalating which is a negative impact on the market movements, where Italian and Spanish 10-year governments bonds plummeting in the European session.

The kiwi dropped against greenback to the lowest level during the month after Asian stock markets started the week with a sharp decline, which comes as a negative outlook for Asian companies, reducing demand for Kiwi.

On Tuesday, the New Zealand economy is to release its 2-year inflation expectations for the third quarter at 03:00 GMT, where the prior reading inclined by 3.0% in the second quarter of the year.

At 14:00 GMT, the U.S. economy will release the new home sales for July, where it’s expected with 1.0% rise from 312 to 315 thousands.

The Richmond Fed Manufacturing Index for August will be up at 14:00 GMT where it had a previous reading of –1.0 and expected to at -8.0.