Kiwi Rebounds

The NZD/USD pair had a strong rally on the back of retracing commodity prices and generally firm trading day for risk pairs across the board. On the chart below support at the 38.2% retracement of the latest move (1/14 .7440 - 2/5 .6806.) A break of this level could lead to another move against the Kiwi until more support could be found at the 2o0 day moving average.

New Zealand Q4 CPI

The 4th quarter New Zealand CPI came out softer than expected pushing the Kiwi marginally lower on the release. The details are as follows:

CPI (QoQ) - Survey:0.0%   Actual:-0.2%   Prior:1.3%

CPI (YoY) - Survey:2.1%   Actual:2.0%   Prior:1.7%

The Kiwi is coming under less pressure as the commodity and positive carry currencies continue to outperform other pro-risk currencies against the USD. On the chart below we could see some light support develop below the 73 cent handle on Kiwi with a move below today’s lows.

$NZDUSD testing 100 hour MA support

The NZDUSD has been rallying for the last 3 or so weeks. During that time the price has been able to track above the 100 hour MA . Over the last 3 days, the price is consolidating and over the last 6 hours the pair is testing this moving average hard. The current 100 hour MA comes in at the 0.7320 level. .  The low for the day comes in at the 0.7312.  These levels are key support. A move below should lead to further downside momentum for the pair with a target being the 38.2% retracement at the 0.7253 and then the 200 hour MA at the 0.7226 level and rising.

Keep the key levels in mind.

New Zealand Trade Balance (NZD/USD)

The New Zealand Trade Balance reading for November beat forecasts and the Kiwi got a boost against the USD, continuing its rally following the Fed Meeting Minutes earlier in the session. The details of the release are as follows: 

Trade Balance - Survey:-299M    Actual:-269M   Prior:-487M

Imports - Survey:3.42B    Actual:3.34B   Prior:3.45B

Exports - Survey:3.18B    Actual:3.07B   Prior:2.97B

TB YTD - Survey:-869    Actual:-846   Prior:-1164

The NZD/USD pair is attempting to retrace the new 2010 highs, with support seen at the 50% retracement of the latest move.

New Zealand Current Account Balance

The New Zealand Current Account Balance and its ratio to GDP came out better than expected, giving the Kiwi a light bid after taking a hit to start the week. The readings were as follows:

Current Account Balance  -Survey:-2.03B   Actual:-1.413B   Prior:.124B

Account Deficit - GDP Ratio - Survey:-3.5%   Actual:-3.1%   Prior:-5.9%

NZD/USD is approaching what has acted as a support level above the 70 cent handle. A break could bring the mid-summer highs into play.

NZD Breaks November Lows

The NZD/USD pair broke through November lows and the 71 cent handle on weaker trade balance (-487M) and export figures (2.97B), coupled with declining stocks and risk aversion controlling a thin market right now.

Reserve Bank of New Zealand says current high level unsustainable

The RBNZ Bollard comments that the current high value is unsustainable.  They also commented that they expect more bank failures as unemployment rises.  The NZ financial system is strong but risks are still elevated.

The news has sent the NZDUSD lower.  The pair has moved down to support as measured by the 200 bar MA.  That level comes in at the 0.7404 level.  We will be watching this level along with the 100 bar MA on the same chart at the 0.7408.

New Zealand News

The Kiwi jumped at the end of trading on 10/13 as the New Zealand government announced the removal of some crisis measures. The RBNZ commented that they will remove some liquidity facilities and term auction facilities. In addition to this positive report, REINZ House Sales year over year came in better for September at 43.7% versus a 39% reading the prior month. Below you can see the reaction of the NZD against the USD and the AUD. It is important to note the pairs did not hit critical resistance (74.15 on NZD/USD) and support (1.2279 / 100hr mavg on the AUD/NZD) levels.

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